Question

Following is the balance sheet of A, B, and C who share profits and losses of the business in the ratio of 3:2:1.

Additional Information:
a. On 1st April, 2021, they admitted D as a partner for 1/4th for which he brought ₹1,20,000 as his capital and ₹30,000 as a share of goodwill.
b.The value of furniture has increased by 10%.
c. Market value of investments brought down to ₹2,00,000.

Pass the journal entry for revaluation of fixed assets:

[2 marks]

• A. $$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{Revaluation A/c}& \text{Dr.}& & \text{9,500}& \\ & \text{To Furniture A/c}& & & & \text{9,500}\\ & & & & & \end{array}$$
• B. $$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{Furniture A/c}& \text{Dr.}& & \text{9,500}& \\ & \text{To Revaluation A/c}& & & & \text{9,500}\\ & & & & & \end{array}$$
• C. $$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{Revaluation A/c}& \text{Dr.}& & \text{1,04,500}& \\ & \text{To Furniture A/c}& & & & \text{1,04,500}\\ & & & & & \end{array}$$
• D. $$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{Furniture A/c}& \text{Dr.}& & \text{1,04,500}& \\ & \text{To Revaluation A/c}& & & & \text{1,04,500}\\ & & & & & \end{array}$$

Answer 1

The correct option is B $$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{Furniture A/c}& \text{Dr.}& & \text{9,500}& \\ & \text{To Revaluation A/c}& & & & \text{9,500}\\ & & & & & \end{array}$$

Furniture is appreciated by ₹9,500 (10% of ₹95,000) and hence, it is debited and the revaluation account is credited.