X, Y and Z who are sharing profits and losses in the ratio of 5 : 3 : 2, decide to share future profits and losses in the ratio of 2 : 3 : 5 w.e.f. 1st April, 2023, after admission of A. An extract of the Balance Sheet as at 31st March 2023 is as follows:
X, Y and Z who are sharing profits and losses in the ratio of 5 : 3 : 2, decide to share future profits and losses in the ratio of 2 : 3 : 5 w.e.f. 1st April, 2023, after admission of A. An extract of the Balance Sheet as at 31st March 2023 is as follows:
| Liabilities | ₹ | Assets | ₹ |
| Creditors | 2,00,000 | Plant and Machinery 2,00,000
Less: Provision for Depreciation 10,000 |
1,90,000 |
(i) If Plant and Machinery is valued at ₹ 1,71,000, the Journal entry will be:
a)
Revaluation A/c Dr. ₹ 19,000
To Provision for Depreciation On Plant and Machinery A/c ₹ 19,000
b)
Plant and Machinery A/c Dr. ₹ 19,000
To Revaluation A/c ₹ 19,000
c)
Revaluation A/c Dr. ₹ 19,000
To Plant and Machinery A/c ₹ 19,000
d)
Provision for Depreciation on Plant and Machinery A/c Dr. ₹ 19,000
To Revaluation A/c ₹ 19,000
(ii) If creditors of ₹ 10,000 were not recorded and are now to be recorded, the Journal entry will be:
a) Revaluation A/c Dr. ₹ 10,000
To Creditors A/c ₹ 10,000
b) Creditors A/c Dr. ₹ 10,000
To Revaluation A/c ₹ 10,000
c) Revaluation A/c Dr. ₹ 2,10,000
To Creditors A/c ₹ 2,10,000
d) Creditors A/c Dr. ₹ 2,10,000
To Revaluation A/c ₹ 2,10,000
Anurag Pathak Changed status to publish June 1, 2023
Ans – i) – C, ii) – A
Explanation:-
(i)
As it is the reduction in the book value of Plant and Machinery. The plant and machinery would be debited to Revaluation Account.
(ii)
Increase in creditors is debited to Revaluation Account at the time of reconstituted of the partnership Firm.
Anurag Pathak Changed status to publish June 1, 2023
