Balance sheet

Additional Information:

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

Based on the given details Revaluation Account will be:

Debited by ₹12,000

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

Debtors = 2,10,000
Less: Bad debts = 10,000
Remaining debtors = 2,00,000

Provision for doubtful debts is 10%.
Provision = 2,00,000 x 10/100
                = 20,000

Old provision = 18,000
Less: Bad debts = 10,000
Remaining provision = 8,000

Provision to be made = 20,000
Provision available = 8,000
Extra provision to be made = 20,000 - 8,000
                                           = 12,000

Provision is a loss for the firm so it is debited to revaluation account. So, revaluation account is debited by ₹12,000.