At the time of admission of a 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 ₹ 50,000).
(b) Creditors were written back by ₹ 5,000.
(c) Building was appreciated by 20% (Book Value of Building ₹ 2,00,000).
(d) Unrecorded Investments were worth ₹ 15,000.
(e) A Provision of ₹ 2,000 was made for an Outstanding Bill for repairs.
(f) Unrecorded Liability towards suppliers was ₹ 3,000.
Pass necessary journal entries.
Answers
Answer:
partnership is an arrangement where parties, known as business partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations. and then you should have the opportunity of working..
The necessary journal entries are calculated below:
Explanation:
As per the Journal Entry,
An amount of Rs. 5000, Rs. 40000 and Rs. 15000 has been Debited from the Creditors A/c, Building A/c and the Investment A/c respectively and the total money of about Rs. 60000 has been credited to the Revaluation A/c
.
This is because of the increase in assets and decrease in liabilities which has been transferred to revaluation account.
An amount of Rs. 10000 has been Debited from the Revaluation A/c and an amount of about Rs. 5000, Rs. 2000 and Rs. 3000 has been credited to the Provision for doubtful debts A/c
, to the Reserve for outstanding Repair Bill A/c and to the Creditors A/c respectively.
This is due to the increase in liabilities, decrease in assets and reserves and provision created transferred to revaluation account.
An amount of Rs. 50000 has been Debited from the Revaluation A/c and the same amount has been credited to the old partners capital A/c.
This is being the profit on revaluation transferred to partners' capital.
