Pass entries in the firm’s journal for the following on admission of a partner:
(i) Machinery be depreciated by ₹ 16,000 and Building be appreciated by ₹ 40,000.
(ii) A provision be created for Doubtful Debts @ 5% of Debtors amounting to ₹ 80,000.
(iii) Provision for warranty claims be increased by ₹ 12,000.
Answers
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Solution:
Journal
Sr. No. Particulars Debit Rs. Credit Rs.
(i) Revaluation A/c Dr. 16,000
To Machinery A/c 16,000
(Being value of machinery decreased)
(ii) Building A/c Dr. 40,000
To Revaluation A/c 40,000
(Being value of building increased)
(iii) Revaluation A/c Dr. 4,000
To Provision for doubtful Debts A/c 4,000
(Being provision created on debtors)
(iv) Revaluation A/c Dr. 12,000
To provision for warranty claims A/c 12,000
(Being liability recorded)