Question

pass jounal entry- stock is undervalued by 10% (book value of stock is 18000)​

Answer 1

Answer:

Stock A/c. Dr. 1800

To Revaluation A/C. 1800

(Being increase in the value of stock.)

Explanation:

Undervalue means increase the value of asset.

The book value of stock is 18000 , undervalue 10% means 1800.

I hope it is helpful for you.

Answer 2

Answer:

Stock Account(Debit)   1800

   To Revaluation(Credit)  1800

(Being stock undervalued by 10%)

Explanation:

Revaluation Account:

• Revaluation accounts are nominal accounts created for the distribution and transfer of gains and losses resulting from changes in the profit-sharing ratio, partner admissions, retirement, and death, as well as increases and decreases in the book value of assets and liabilities.

Undervaluation:

• A stock is considered undervalued if its price is much lower than what is thought to be its inherent worth.
• For instance, if a stock is trading for $50 but has a $100 value based on expected future cash flows, it is undervalued.

Stock:

• Stock is a claim against a company's assets and income and is a kind of ownership in the company.
• A stockholder is entitled to a proportional part of any dividends declared by the board of directors of a company, as well as any remaining assets in the event that the corporation is dissolved or sold.

Journal Entry:

• A journal entry is an act of recording any transaction, whether one is commercial or not.
• An accounting diary that displays the debit and credit balances of a corporation lists transactions.
• Multiple recordings, each of which is either a debit or a credit, may be included in the journal entry.

Conclusion:

Stock Account(Debit)   1800

   To Revaluation(Credit)  1800

(Being stock undervalued by 10%)

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