In a partnership firm, when liabilities are reassessed, it was found that a creditor of ₹1000 is not likely to be claimed hence is to be written back. What will be the journal entry for this?

Creditors A/c      Dr..    ₹1000
    To Revaluation A/c             ₹1000
(Creditors written off)

At the time of admission of a new partner, it is always desirable to ascertain whether the assets of the firm are shown in books at their current values. In case the assets are overstated or understated, these are revalued. Similarly, a reassessment of the liabilities is also done so that these are brought in the books at their correct values. At times there may also be some unrecorded assets and liabilities of the firm. These also have to be brought into the books of the firm. For this purpose the firm has to prepare the Revaluation Account.
 For reduction in the amount of a liability
Liability A/c Dr.
   To Revaluation A/c (Gain)