Question

At the time of admission of new partner $C$, the assets and liabilities of $A$ and $B$ were revalued as follows:
(a) A provision for Doubtful Debts @$10\%$ was made on Sundry Debtors (Sundry Debtors $Rs.50,000$).
(b) Creditors were written back by $Rs.5000$.
(c) Building was appreciated by $20\%$ (Book value of Building $Rs.2,00,000$).
(d) Unrecorded Investment were worth $Rs.15,000$.
(e) A Provision of $Rs.2,000$ was made for an Outstanding Bill for repairs.
(f) Unrecorded Liability towards suppliers was $Rs.3,000$.
Pass necessary Journal entries:

Answer 1

(i) Revaluation A/c Dr. 5000

To Provision for doubtful debts 5000

(Being increase in liabilities recorded in the revaluation account)

(ii) Creditore A/c Dr. 5000

To Revaluation A/c 5000

(Being increase in assets transferred to revaluation account)

(iii) Building A/c Dr. 40000

To Revaluation A/c 40000

(Being increase in assets transferred to revaluation account)

(iv) Investment A/c Dr. 15000

To Revaluation A/c 15000

(Being increase in assets transferred to revaluation account)

(v) Revaluation A/c Dr. 2000

To provision for repairs A/c 2000

(Being increase in liabilities recorded in the revaluation account)

(vi) Revaluation A/c Dr. 3000

To Creditors A/c 3000

(Being increase in liabilities recorded in the revaluation account)

(vii) Revaluation a/c.... Dr. 50000

To A's Capital a/c 25000

To B's Capital a/c 25000

(Being profit on revaluation distributed among the partners in the ratio of 1:1)