Question

On the date of admission of Ajay as a partner, the Balance Sheet of the firm of Nita and Rita showed a balance of ₹ 80,000 in the Workmen Compensation Reserve.

Choose the correct option to record the effect of a workman’s compensation claim of ₹ 90,000 on the accounts of the partnership firm.

Options

• The Revaluation Account to be credited with ₹ 10,000.

• The Revaluation Account to be debited with ₹ 10,000.

• The Capital Accounts of Nita and Rita to be debited with ₹ 90,000.

• The Capital Accounts of Nita and Rita to be credited with ₹ 90,000.

Answer 1

The Revaluation Account to be debited with ₹ 10,000.

Explanation:

Particulars	Amt. ₹	Amt. ₹
Workmen’s Compensation Reserve A/c   ...Dr.	80,000	-
Revaluation A/c   ...Dr.	10,000	-
To Workmen Compensation Claim A/c	-	90,000