In a firm, a new partner is admitted and for this purpose revaluation was done. It was found that a bad debt of ₹5,000 which was written off previously has been received now. How will it be treated?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- Credited to Revaluation Account.
Journal entry done for the recovery of bad debts-
Bank A/c Dr. ₹5,000
To Revaluation A/c ₹5,000
So, Bad debt of ₹5,000 will be credited to revaluation account.