Question

where is the discount reserve on debtors recorded at the time of reconstruction of partnership​

Answer 1

Answer:

Provision for doubtful debts is created as a reserve for any bad debt that occurs. According to company's credit policies and other information, some percentage is fixed over sundry debtors as provision.

In the question sundry debtors balance is 76,000 and provision for doubtful debt is 8,000. We need to pass journal entries for the bad debt that occurred and 5% provision that needs to be maintained.

Bad Debt A/c Dr 6,000

To provision for doubtful debts A/c 6,000

(Transfer of bad debts to provision for doubtful debt A/c)

P&L A/c Dr 1,800

To Provision for doubtful debts A/c 1,800

Notes:- New provision to be created = 5%* 76,000 = 3,800

Add:- Bad debts = 6,000

Less:- Old provision =( 8,000)

Balance provision to be created from P&L = 1,800

Answer 2

Answer:

Before we introduce a new partner to the partnership firm, we must ensure all the assets and liabilities are valued correctly. So just prior to introducing a new partner revaluation account is made and subsequent adjustments are made in books of accounts. Let us take a look.