Balance sheet

Additional Information:

(i) Bad debts amounted to Rs. 10,000
(ii) Create provision for doubtful debts @ 10% of debtors.

Based on the given details Revaluation Account will be:

Debited by Rs. 12,000

The correct answer is Option (3) → Debited by Rs. 12,000.

Debtors = 210000
Less: Bad debts = 10000
Remaining debtors = 200000

Provision for doubtful debts is 10%.
Provision = 200000 x 10/100
              = 20000

Old provision = 18000
Less: Bad debts = 10000
Remaining provision = 8000

Provision to be made = 20000
Provision available = 8000
Extra provision to be made = 20000 - 8000
                                        = 12000

Provision is a loss for the firm so it is debited to revaluation account.