Question

$X$ and $Y$ are partners in firm sharing profits in the ratio of $3:2$. They admitted $Z$ as a new partner and fixed the new profit-sharing ratio as $3:2:1$. At time of admission of $Z$, Debtors and Provision for Doubtful Debts appeared at $Rs.50,000$ and $Rs.5,000$ respectively All debtors are good. Pass the necessary Journal entries.

Answer 1

(i) Provision for Doubtful Debts a/c.... Dr. 5000

To Revaluation a/c 5000

(Being provision for doubtful debts written off)

(ii) Revaluation a/c... Dr. 5000

To X's Capital a/c 3000

To Y's Capital a/c 2000

(Being profit on revaluation distributed among the partners in the ratio of 3:2)