Question

Murthy and Madhavan were partners in a firm sharing profits and losses in the ratio of 3 : 1. They admitted Shriniwas as a new partner in the firm. On admission of Shriniwas, there existed a balance of ₹ 8,00,000 in debtors account and a balance of ₹ 50,000 in provision for bad debts account. Debtors ₹ 60,000 proved bad and hence were written off. It was decided to maintain a provision for bad debts at 10% of the debtors. The revaluation account will be debited by ............... on the reconstitution of the firm.

विकल्प

• ₹ 80,000

• ₹ 10,000

• ₹ 84,000

• ₹ 74,000

Answer 1

₹ 84,000

Explanation:

1. Write off Actual Bad Debts

• Initial Debtors Book Value: ₹ 8,00,000
• Less: Bad Debts Written Off: – ₹ 60,000
• New/Remaining Debtors Balance: ₹ 7,40,000

2. Find the Loss from Written-off Bad Debts

• Actual Bad Debts Amount: ₹ 60,000
• Less: Existing Provision for Bad Debts: – ₹ 50,000
• Uncovered Bad Debts Loss (Debited to Revaluation): ₹ 10,000

3. Calculate the New Provision Required

• Required Provision Rate: 10%
• New Provision Amount: 10% of ₹ 7,40,000 (Remaining Debtors) = ₹ 74,000

4. Total Amount Debited to Revaluation Account:

10,000 (Uncovered Bad Debts) + 74,000 (New Provision) = 84,000