A and B are partners sharing profit and losses in ratio of 5:3. C is admitted for 1/4th share. On the date of reconstitution, the debtors stood at ₹40000, bills receivable stood at ₹10000 and the provision for doubtful debts appeared at ₹4000. A bill receivable of ₹10000 which was discounted from the bank earlier has been reported to be dishonoured. The firm has sold the debtors so arising to a debt collection agency at a loan of 40% . If bad debts now have arisen for ₹6000 and firm decides to maintain provision at same rate as before then amount of provision to be debited to revaluation account would be:
(a) ₹4400
(b) ₹4000
(c) ₹3400
(d) none of the above
Answers
Answered by
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Answer:
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Answered by
34
Answer:
Explanation:
Debtors = Rs.40000
Provision on dubtful debts = 4000 that is 10 % of Debtors
Debtors = 40000
(-) Bad debts= 6000
34000
Provision on Doubtful debts = 10 % of 34000 = 3400
So, the Provision on doubtful debts debited to Revaluationary A/c is 3400
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