Diya and Tiya are partners sharing profit and losses in the ratio of
2 : 1. Their Balance Sheet was as follows:
Balance Sheet of Karan and Tarun as at December 31,2014
Liabilities ` Assets `
Creditors 10,000 Cash in hand 7,000
Bills payable 7,000 Debtors 26,000
Building 20,000
Capitals: Investment 15,000
Diya 40,000 Machinery 13,000
Tiya 30,000 70,000 Stock 6,000
_-----------------------------------------+
87000 87000
Banti is admitted as a partner and assets are revalued and liabilities reassessed as
follows:
(i) Create a Provision for doubtful debt on debtors at ` 800.
(ii) Building and investment are appreciated by 10%.
(iii) Machinery is depreciated at 5%
(iv) Creditors were overestimated by ` 500.
Make journal entries and Prepare revaluation account before the admission of Banti.
Solution :
Journal
Date Particulars। L.F। . Debit Credit
Revaluation A/c Dr. 800
To Provision for Doubtful Debts 800
[Provision made for doubtful debts]
Building A/c Dr. 2,000
Investment A/c Dr. 1,500
To Revaluation A/c 3,500
[Increase in the value of Building &
Investment]
Revaluation A/c Dr. 650
To Machinery A/c 650
[Decrease in the value of machinery]
Creditors A/c Dr. 500
To Revaluation A/c 500
[Value of creditors reduced by ` 500]
Revaluation account
Dr. Cr.
Particulars Particulars `
To Provision for
Doubtful Debts 800 By Building 2,000
To Machinery 650 By Investment 1,500
To Profit transferred to By Creditors 500
Diya’s Capital 1,700
Tiyas Capital 850
--------------------------------------------
4000 4000
