Read the following passage and answer the following question. A, B & C are partners sharing profits and losses in the ratio of 2:2:1. B decided to retire on 31st March 2021. On the date of retirement, some of the assets and liabilities appeared in the books as follows- Creditors- ₹70,000 |
Pass the journal entry for the creation of 5% provision on doubtful debts. |
Revaluation A/c Dr. ₹2000 Revaluation A/c Dr. ₹1000 Realisation A/c Dr. ₹1000 Provision for doubtful debts Dr. ₹1000 |
Revaluation A/c Dr. ₹1000 |
The correct answer is option 2- Debtors = ₹20,000 Provision of doubtful debts is a liability of the firm so revaluation is debited for the loss and provision of doubtful debts account is credited as increase in liabilities is credited. So, the correct journal entry will be- |