Revaluation Account-1 : Accounting For Partnership Firm

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1. REVALUATION ACCOUNT Class : XII Subject : Accountancy Ms. GEETA HANDA Geeta Handa

2. Geeta Handa PGT Accountancy 20 years experience of teaching accountancy. 14 years experience of checking accountancy papers of CBSE Worked as examiner for conducting practical exam of accountancy . [email protected] Geeta Handa

3. When :- At Reconstitution of Partnership Firm: Change in Ratio ; Admission ; Retirement & Death of a Partner Why :- To Revalue the Assets & To Reassess the Liabilities

4. Nature :- Nominal Account Golden Rule Applied :- Debit all Expenses / Losses Credit all Gains/Profits

5. Particulars Rs . Particulars Rs . Revaluation Account Dr. Cr. Geeta Handa

6. Particulars Rs . Particulars Rs . To Asset A/c --------- By Assets A/c -------- To Liabilities A/c -------- By Liabilities A/c --------- To Unrecorded Liabilities A/c -------- By Unrecorded Asset A/c ------- To Provision For Doubt Debts -------- By Provision For Doubt Debts -------- To Gain (Profit) transferred to Partners’ Capital / Current A/c ( Balance Amount ) --------- By Loss transferred to Partners ‘ Capital/ Current A/c ( Balance Amount ) ---------- Revaluation Account Dr. Cr. Geeta Handa * Note : Current A/c in case of Fixed Capitals

7. Particulars Rs . Particulars Rs . To Asset A/c --------- By Assets A/c -------- To Liabilities A/c -------- By Liabilities A/c --------- To Unrecorded Liabilities A/c -------- By Unrecorded Asset A/c ------- To Provision For Doubt Debts -------- By Provision For Doubt Debts -------- To Profit transferred to : A’s Capital / Current A/c ------- B’s Capital / Current A/c ------- --------- By Loss transferred to : A’s Capital / Current A/c ------- B ’s Capital / Current A/c ------- ---------- Revaluation Account Dr. Cr. Geeta Handa * Note : Always distribute Profit /Loss of Revaluation A/c in O ld Partners in O ld Ratio

8. Example : 1 A and b are Partners in a firm sharing Profits in the ratio 3 : 2 . A t the time of admission of a partner C Assets and Liabilities were revalued as follows: Machinery is depreciated by 20%.( Book value of machinery Rs.80,000) Geeta Handa

9. Geeta Handa Journal Entry Date Particulars L.F Dr . ( Rs .). Cr. ( Rs . ) Revaluation A/c Dr. To Machinery A/c ( Being Machinery depreciated )   16,000 16 ,000

10. Particulars Rs . Particulars Rs . To Machinery A/c 16,000 Revaluation Account Dr. Cr. Geeta Handa

11. Example : 1 A and b are Partners in a firm sharing Profits in the ratio 3 : 2 . A t the time of admission of a partner C Assets and Liabilities were revalued as follows: Machinery is depreciated by 20%.( Book value of machinery Rs.80,000) Land and Building to be appreciated by Rs.56,000. Geeta Handa

12. Geeta Handa Journal Entry Date Particulars L.F Dr . ( Rs .). Cr. ( Rs . ) Land and Building A/c Dr. To Revaluation A/c ( Being the assets revalued )   56,000 56,0 00

13. Particulars Rs . Particulars Rs . To Machinery A/c 16,000 By Land and Building A/c 56,000 Revaluation Account Dr. Cr. Geeta Handa

14. Example : 1 A and b are Partners in a firm sharing Profits in the ratio 3 : 2 . A t the time of admission of a partner C Assets and Liabilities were revalued as follows: Machinery is depreciated by 20%.( Book value of machinery Rs.80,000) Land and Building to be appreciated by Rs.56,000. Creditors were written back by Rs.5,000. Geeta Handa

15. Geeta Handa Journal Entry Date Particulars L.F Dr . ( Rs .). Cr. ( Rs . ) Creditors A/c Dr. To Revaluation A/c ( Being the Creditors reassessed )   5,000 5,0 00

16. Particulars Rs . Particulars Rs . To Machinery A/c 16,000 By Land and Building A/c 56,000 By Creditors A/c 5,000 Revaluation Account Dr. Cr. Geeta Handa

17. Example : 1 A and b are Partners in a firm sharing Profits in the ratio 3 : 2 . A t the time of admission of a partner C Assets and Liabilities were revalued as follows: Machinery is depreciated by 20%.( Book value of machinery Rs.80,000) Land and Building to be appreciated by Rs.56,000. Creditors were written back by Rs.5,000. Unrecorded Liability towards suppliers was Rs.3,000. Geeta Handa

18. Geeta Handa Journal Entry Date Particulars L.F Dr . ( Rs .). Cr. ( Rs . ) Revaluation A/c Dr. To Creditors A/c ( Being the Creditors reassessed )   3,000 3 ,000

19. Particulars Rs . Particulars Rs . To Machinery A/c 16,000 By Land and Building A/c 56,000 To Creditors A/c 3,000 By Creditors A/c 5,000 Revaluation Account Dr. Cr. Geeta Handa

20. Example : 1 A and b are Partners in a firm sharing Profits in the ratio 3 : 2 . A t the time of admission of a partner C Assets and Liabilities were revalued as follows: Machinery is depreciated by 20%.( Book value of machinery Rs.80,000) Land and Building to be appreciated by Rs.56,000. Creditors were written back by Rs.5,000. Unrecorded Liability towards suppliers was Rs.3,000. A provision of Rs.2,000 was made for an Outstanding Bill for Repairs. Geeta Handa

21. Geeta Handa Journal Entry Date Particulars L.F Dr . ( Rs .). Cr. ( Rs . ) Revaluation A/c Dr. To Outstanding Repairs A/c ( Being a provision made for unrecorded liability of repairs )   2,000 2 ,000

22. Particulars Rs . Particulars Rs . To Machinery A/c 16,000 By Land and Building A/c 56,000 To Creditors A/c 3,000 By Creditors A/c 5,000 To Outstanding Repairs A/c 2,000 Revaluation Account Dr. Cr. Geeta Handa

23. Example : 1 A and b are Partners in a firm sharing Profits in the ratio 3 : 2 . A t the time of admission of a partner C Assets and Liabilities were revalued as follows: Machinery is depreciated by 20%.( Book value of machinery Rs.80,000) Land and Building to be appreciated by Rs.56,000. Creditors were written back by Rs.5,000. Unrecorded Liability towards suppliers was Rs.3,000. A provision of Rs.2,000 was made for an Outstanding Bill for repairs. Unrecorded Investments were valued at Rs.15,000. Geeta Handa

24. Geeta Handa Journal Entry Date Particulars L.F Dr . ( Rs .). Cr. ( Rs . ) Investments A/c Dr. To Revaluation A/c ( Being Investments recorded )   15,000 15,0 00

25. Particulars Rs . Particulars Rs . To Machinery A/c 16,000 By Land and Building A/c 56,000 To Creditors A/c 3,000 By Creditors A/c 5,000 To Outstanding Repairs A/c 2,000 By Investments A/c 15,000 Revaluation Account Dr. Cr. Geeta Handa

26. Example : 1 A and b are Partners in a firm sharing Profits in the ratio 3 : 2 . A t the time of admission of a partner C Assets and Liabilities were revalued as follows: Machinery is depreciated by 20%.( Book value of machinery Rs.80,000) Land and Building to be appreciated by Rs.56,000. Creditors were written back by Rs.5,000. Unrecorded Liability towards suppliers was Rs.3,000. A provision of Rs.2,000 was made for an Outstanding Bill for repairs. Unrecorded Investments were valued at Rs.15,000. A Provision for Bad Debts @10% was made on Sundry Debtors . ( Sundry Debtors Rs.50,000) Geeta Handa

27. Geeta Handa Journal Entry Date Particulars L.F Dr . ( Rs .). Cr. ( Rs . ) Revaluation A/c Dr. To Provision for Bad Debts A/c ( Being 10% Provision created on Debtors of Rs.50,000 )   5,000 5 ,000

28. Particulars Rs . Particulars Rs . To Machinery A/c 16,000 By Land and Building A/c 56,000 To Creditors A/c 3,000 By Creditors A/c 5,000 To Outstanding Repairs A/c 2,000 By Investments A/c 1 5,000 To Provision for Bad Debts A/c 5,000 Revaluation Account Dr. Cr. Geeta Handa

29. Particulars Rs . Particulars Rs . To Machinery A/c 16,000 By Land and Building A/c 56,000 To Creditors A/c 3,000 By Creditors A/c 5,000 To Outstanding Repairs A/c 2,000 By Investments A/c 1 5,000 To Provision for Bad Debts A/c 5,000 To Gain transferred to Partners’ Capital A/c (Balance Amount) 50,000 76,000 76,000 Revaluation Account Dr. Cr. Geeta Handa

30. Particulars Rs . Particulars Rs . To Machinery A/c 16,000 By Land and Building A/c 56,000 To Creditors A/c 3,000 By Creditors A/c 5,000 To Outstanding Repairs A/c 2,000 By Investments A/c 1 5,000 To Provision for Bad Debts A/c 5,000 To Gain transferred ( 3 : 2) to : A’s Capital A/c 30,000 B’s Capital A/c 20,000 50,000 76,000 76,000 Revaluation Account Dr. Cr. Geeta Handa

31. Points to be Remember :- Debit side for Losses / Credit Side for Profits Divide the Profit /Loss of Revaluation in Old Ratio. Geeta Handa

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