Balance sheet
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
Debtor ₹2,10,000 (-) Provision for Doubtful Debts ₹18,000 |
1,92,000 |
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:
Answer & explanation
Correct answer: option 3
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.