A, B & C are partners sharing profits in proportion to their capital. B retired from the firm on 1st April 2021 and the remaining partners decided to carry on the partnership. At the time of retirement, their capital accounts show balance- A- ₹450000, B- ₹300000, and C ₹150000. There is also a debit balance of P & L A/c of ₹12000. The firm has debtors of ₹100000 on which ₹2000 is made for provision for doubtful debts. The assets and liabilities of the partnership firm are as follows-
Creditors- ₹108000
General reserve- ₹12000
Cash balance- ₹80000
Stock- ₹90000
Machinery- ₹240000
Land- ₹500000
What will be the entry of provision of ₹15000 be made for repairs?
Answer & explanation
Correct answer: option 1
For an unrecorded liability-
Revaluation A/c Dr.
To Liability A/c
(Unrecorded liability brought into books).
Revaluation A/c Dr... ₹15000
To Provision for repairs A/c ₹15000