Question

Nikhil, Akhil and Amber are partners in a firm. At the time of Akhil’s retirement, Amber takes over furniture of ₹ 12,000 at ₹ 10,000.

Choose the correct journal entry from the following options to record this adjustment.

Options

• Debit Furniture Account ₹ 10,000, Credit Amber’s Capital Account ₹ 10,000.

• Debit Furniture Account ₹ 12,000; Credit Amber’s Capital Account ₹ 10,000; Credit Revaluation Account ₹ 2,000.

• Debit Amber’s Capital Account ₹ 10,000; Credit Furniture Account ₹ 10,000.

• Debit Amber’s Capital Account ₹ 10,000; Debit Revaluation Account ₹ 2,000; Credit Furniture Account ₹ 12,000.

Answer 1

Debit Amber’s Capital Account ₹ 10,000; Debit Revaluation Account ₹ 2,000; Credit Furniture Account ₹ 12,000.

Explanation:

As furniture has been taken over by Amber, thus Amber’s capital account is debited. Since he had taken the furniture at ₹ 10,000, though the book value of it was ₹ 12,000, the firm incurred a loss of ₹ 22,000. Thus, it will be debited to Revaluation A/c.

So, entry will be:

Date	Particulars	Dr. (₹)	Cr. (₹)
	Amber’s Capital A/c    ...Dr.	10,000	-
	Revaluation A/c      ...Dr.	2,000	-
	To Furniture A/c	-	12,000