Question

Kavita and Karan are partners in a firm sharing profits and losses in the ratio 4 : 1. On 1st April, 2021, they admitted Mohit for 1/4th share in the profits of the firm. The balance sheet of Kaviti and Karan showed stock at ₹ 45,000. On admission of new partner, the stock was found undervalued by 10%. The journal entry to give effect to the above adjustment on Mohit's admission will be:

Options

• 	Debit Amount (₹)	Credit Amount (₹)
  Revaluation A/c          ...Dr.	5,000	-
  To Stock A/c	-	5,000

• 	Debit Amount (₹)	Credit Amount (₹)
  Stock A/c          ...Dr.	4,500	-
  To Revaluation A/c	-	4,500

• 	Debit Amount (₹)	Credit Amount (₹)
  Stock A/c          ...Dr.	5,000	-
  To Revaluation A/c	-	5,000

• 	Debit Amount (₹)	Credit Amount (₹)
  Revaluation A/c          ...Dr.	4,500	-
  To Stock A/c	-	4,500

Answer 1

	Debit Amount (₹)	Credit Amount (₹)
Stock A/c          ...Dr.	5,000	-
To Revaluation A/c	-	5,000

Explanation:

Let the value of stock be x

x − 10% of x = ₹ 45,000

`90/100` x = ₹ 45,000

x = `(45,000xx100)/90`

x = ₹ 5,000