At the time of admission of new partner Vansh, old partners Shikha and Sheetal had debtors of Rs. 6,20,000 in their books. As per terms of admission, assets were revalued, and it was found that debtors worth Rs. 15,000 had turned bad and hence should be written off. Which journal entry reflects the correct accounting treatment of the above situation?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Revaluation A/c Dr. Rs. 15,000, To Debtors A/c Rs. 15,000
On admission, a fall in the value of an asset is a loss on revaluation: Revaluation Account is debited and the asset is credited. Debts found bad at that time are such a fall in the value of debtors, so they are written off directly through the Revaluation Account; no separate Bad Debts Account is needed.
Revaluation A/c Dr. Rs. 15,000
To Debtors A/c Rs. 15,000
The loss on revaluation is later shared by the old partners, Shikha and Sheetal, in their old ratio.
NCERT (2026-27 edition):
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