Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Admission of a Partner

Question:

In case of admission of a partner, expenses on the revaluation account are paid by a partner named A of ₹3500, what will be the journal entry for this?

Options:

Expenses A/c         Dr.      ₹3500
   To Revaluation A/c                 ₹3500
(Expenses of revaluation paid by partner)

Revaluation A/c Dr     ₹3500
   To expenses A/c                 ₹3500
(Expenses of revaluation paid by partner)

Revaluation A/c   Dr..    ₹3500
    To A's capital A/c                ₹3500
(Expenses of revaluation paid by partner)

A's capital A/c Dr..  ₹3500
   To Revaluation A/c           ₹3500
(Expenses of revaluation paid by partner)

Correct Answer:

Revaluation A/c   Dr..    ₹3500
    To A's capital A/c                ₹3500
(Expenses of revaluation paid by partner)

Explanation:

The correct answer is option 3 i.e.
Revaluation A/c   Dr..    ₹3500
    To A's capital A/c                ₹3500
(Expenses of revaluation paid by partner)

Expenses are paid by partner; these are to be returned by the firm if it is mentioned in partnership deed. Expenses are losses for the firm that's why revaluation account is debited, and partners' capital A/c is credited.