Question

Riya and Mona are equal partners in a firm. They admitted Juhi and agreed to share future profits in 3 : 2 : 1. The balances in Sundry Debtors and Provision for Doubtful Debts A/c on the date of admission were ₹ 1,25,000 and ₹ 7,500.

Bad Debts amounted to ₹ 4,000. Partners agreed to maintain the Provision for Doubtful Debts at the existing rate.

Pass necessary journal entries.

Answer 1

JOURNAL
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Bad Debts A/c Dr.		4,000
	To Sundry Debtors A/c			4,000
	(Bad Debts written off)
	Provision for Doubtful Debts A/c Dr.		4,000
	To Bad Debts A/c			4,000
	(Bad Debts adjusted from Provision for Doubtful Debts)
	Revaluation A/c Dr.		3,760
	To Provision for Doubtful Debts A/c (1)			3,760
	(Provision made for Doubtful Debts)
	Riya's Capital A/c Dr.		1,880
	Mona's Capital A/c Dr.		1,880
	To Revaluation A/c			3,760
	(Loss on revaluation debited to partners' capital accounts in their old ratio)

Working Notes:

(1) Existing Rate of Provision for Doubtful Debts \[\]= \frac{7,500}{1,25,000} \times 100 = 6\%\]

(2)

	Amount (₹)
Existing Balance in Provision for Doubtful Debts A/c	7,500
Less: Adjusted for Bad Debts	(4,000)
Balance left in Provision Account	3,500
Less: New Provision Required [6% of (1,25,000 - 4,000)]	(7,260)
Net amount charged from Revaluation Account	(3,760)