A, B & C are partners sharing profits in the ratio of 5:4:1. Their capital accounts showing balance of ₹3,00,000, ₹1,50,000, ₹1,50,000 respectively. It is decided between partners that they will share future profits equally. Firm has the following information-
Creditors- ₹1,10,000
Salary payable- ₹30,000
O/s expenses- ₹10,000
General reserve- ₹40,000
Bank balance- ₹2,10,000
Sundry debtors- ₹1,00,000
Provision for doubtful debts- ₹10,000
Stock -₹50,000
Furniture- ₹40,000
Computers- ₹2,00,000
Vehicle- ₹2,00,000
The salary payable of ₹10,000 is not payable as the employee left the firm without any notice. How it will be treated by the firm?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- Credit side of revaluation account.
Salary not payable by the firm means liability of the firm is reduced by that amount. So, it is gain for the firm and the journal entry will be-
Salary payable Dr.
To Revaluation A/c
So, it is written on the credit side of revaluation account.