Question

When the expenses of liquidation are to be borne by the vendor company, then the vendor company debits

Answer 1

When liquidation expenses is paid and borne by seller company then it is debited to Realisation A/C.

Answer 2

It will be debited to realization A/C.

This type of situation will come when the company went under the amalgamation of the company. it is a contractual arrangement when two or more company comes together to form a single business entity.

Most of the time the vendor company pays its own realization expenses and the entry gets passed in the books :

                Realization A/c   Dr.       xx

                       To Cash A/c                  xx

And if the liquidation expenses of vendor company paid by purchasing company:

             Goodwill A/c   dr.      xx

                       To Cash A/c        xx