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
Building- ₹1,00,000
Machinery- ₹40,000
Stock of raw material- ₹20,000
Stock of finished goods- ₹30,000
Debtors- ₹20,000

Pass the journal entry for the creation of 5% provision on doubtful debts.

Revaluation A/c                         Dr. ₹1000
    To Provision for doubtful debts         ₹1000
(Provision on doubtful debts created)

The correct answer is option 2-
Revaluation A/c                         Dr. ₹1000
    To Provision for doubtful debts         ₹1000
(Provision on doubtful debts created)

Debtors = ₹20,000
Provision = 5%
Provision of doubtful debts = 20,000*5/100
                                           = ₹1,000

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-
Revaluation A/c                         Dr. ₹1000
    To Provision for doubtful debts         ₹1000