Revaluation Account

ADMISSION OF
PARTNER
Dr Revaluation Account Cr
. .
Particulars Rs. Rs.
Particulars
Dr
Revaluation Account Cr
. .
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 By Loss transferred to Partners ‘

to Partners’ Capital / Capital/ Current
Current A/c --------- A/c ( Balance ----------
( Balance Amount ) Amount )
* Note : Current A/c in case of Fixed Capitals

. .
To Gain (Profit) transferred By Loss transferred to Partners ‘

to Partners’ Capital / Capital/ Current
Current A/c --------- A/c ( Balance ----------
( Balance Amount ) Amount )
* Note : Current A/c in case of Fixed Capitals

. .
To Profit transferred to : By Loss transferred to :

A’s Capital / Current A/c A’s Capital / Current A/c
------- B’s Capital / Current --------- ------- B’s Capital / Current ----------
A/c A/c
------- -------
* Note : Always distribute Profit /Loss of Revaluation A/c in Old Partners in Old Ratio
Example: Balance Sheet (extract)
1 Liabilities Rs. Assets Rs.
Stock 50,000
Adjustment :
Market Value of Stock is Rs.45,000.
OR
Value of Stock is to be written down by 10% OR
Value of Stock is to be reduced by Rs.5,000.
OR
Value of Stock is to be reduced to Rs.45,000.
OR
Stock was found Reduced by Rs.5,000
.
.
To Stock A/c 5,000
Journal
Date Entry
Particulars L.F Dr. ( Rs.). Cr. (Rs. )
Revaluation A/c Dr. 5,000

To Stock A/c 5,000
( Being the Stock revalued)
Example:2 Balance Sheet (extract)
Liabilities Rs. Assets Rs.
Building 2,00,000
Adjustment :
Revised value of Building is Rs.2,40,000.
OR
Building is to be appreciated by 20%
OR
Value of Building is to be raised by Rs.40,000.
OR
Building is to be increased to Rs.2,40,000.
OR
Building was found over valued by Rs.40,000
.
.
By Building A/c 40,000
Journal
Date Entry
Building A/c Dr. 40,000

To Revaluation A/c 40,000
( Being the building revalued)
Example: 3 Balance Sheet (extract)

Creditors 70,000
Adjustment :
Creditors are to be paid Rs.1,000 more.
OR
A Creditor of Rs.1,000 not recorded in books to be taken into account.
OR
Creditors were unrecorded to the extent of Rs.1,000.
OR
Unrecorded liability towards Suppliers Rs.1,000.
OR
Creditors reassessed to be paid Rs.71,000.
.
.
To Creditors A/c 1,000
Journal Entry
Date Particulars L.F Dr. ( Rs.). Cr. (Rs. )

To Creditors A/c 1,000
( Being the Creditors reassessed)
Example: 4 Balance Sheet (extract)
Sundry Creditors 30,000
Adjustment :
Creditors are to be paid Rs.1,500 less.
OR
An item of Rs.1,500 included in Sundry Creditors is not likely to be Claimed.
OR
A liability of Rs.1,500 included in Sundry Creditors was not likely to arise.
OR
Creditors were written back by Rs.1,500
OR
It is found that the Creditors included a sum of Rs.1,500 which is not to be paid.
.
.
By Creditors A/c 1,500
Journal Entry
Creditors A/c Dr. 1,500

( Being the Creditors reassessed)
Geeta Handa
Example: 5 Unrecorded Liability
Adjustment :
Outstanding Expenses amounted to Rs.3,200 .
OR
A liability for Outstanding Expenses of Rs.3,200 is to be created.
OR
Unrecorded liability for Expenses was Rs.3,200.
OR
A bill for Rs.3,200 for Expenses was not accounted.
OR
Revaluation Account
Dr Cr
.
.
To Outstanding Expenses A/c 3,200
Journal Entry

To Outstanding Expenses A/c 3,200
(Being the outstanding
Expenses recorded)
Example: 6 Unrecorded Assets
Adjustment :
Unrecorded Investments worth Rs.7,000 .

OR
Investments of Rs.7,000 which did not appears in the books should be recorded.
OR
An unrecorded Investment of Rs.7.000 be accounted.
OR
.
Geeta Handa
.
.
By Investments A/c 7,000
Journal
Date Entry
Investments A/c Dr. 7,000

( Being the Investments recorded)
Example:7 Balance Sheet (extract)
Debtors 1,00,000
Less: Provision for
Doubtful Debts 93,000
7,000
Adjustment :
Provision for Doubtful Debt is to be Rs.10,000.
OR
Provision for Doubtful Debt be increased by Rs.3,000.
OR
Provision for Doubtful Debt be increased to Rs.10,000.
OR
Provision for Doubtful Debt is to be created @ 10 % on debtors.
.
.
To Provision for 3,000

Doubtful Debt A/c
Journal
Date Entry

3,000
To Provision for Doubtful Debt A/c
(Being Provision for doubtful debt )
Question M and N are Partners in a firm sharing Profits in the ratio 2 : 1.
At the time of reconstitution of firm Assets and Liabilities were revalued as
follows:
1. Market Value of Stock is Rs.45,000.(Book value of Stock Rs.50,000)
2. Building is to be appreciated by Rs.40,000.
3. Creditors are to be paid Rs.1,000 more.
4. A liability of Rs.1,500 included in Sundry Creditors was not likely to
arise.
4. A liability for Outstanding Expenses of Rs.3,200 is to be created.
5. Unrecorded Investments were valued at Rs.7,000.
6. Provision for Doubtful Debt be increased by Rs.3,000.
. .
To Stock A/c 5,000 By Building A/c 40,000
To Creditors A/c 1,000 By Creditors A/c 1,500
To Outstanding Expenses A/c 3,200 By Investments A/c 7,000

To Provision for Bad Debts A/c 3,000
To Gain transferred to Partners’
Capital A/c (Balance Amount) 36,300
48,500 48,500
. .
To Stock A/c 5,000 By Building A/c 40,000
To Creditors A/c 1,000 By Creditors A/c 1,500
To Outstanding Expenses A/c 3,200 By Investments A/c 7,000

To Provision for Bad Debts A/c 3,000
To Gain transferred (2 : 1 ) to
M’s Capital A/c 24,200
N’s Capital A/c 12,100 36,300
48,500 48,500
Points to be Remember :-
• Debit side for Losses / Credit Side for Profits
• Divide the Profit /Loss of Revaluation in Old

Ratio.

Revaluation Account

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Revaluation Account

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ADMISSION OF

To Liabilities A/c -------- By Liabilities A/c ---------

To Unrecorded Liabilities A/c -------- By Unrecorded Asset A/c -------

To Gain (Profit) transferred By Loss transferred to Partners ‘

* Note : Current A/c in case of Fixed Capitals

To Liabilities A/c -------- By Liabilities A/c ---------

To Unrecorded Liabilities A/c -------- By Unrecorded Asset A/c -------

To Gain (Profit) transferred By Loss transferred to Partners ‘

* Note : Current A/c in case of Fixed Capitals

To Liabilities A/c -------- By Liabilities A/c ---------

To Unrecorded Liabilities A/c -------- By Unrecorded Asset A/c -------

To Profit transferred to : By Loss transferred to :

To Stock A/c 5,000

Revaluation A/c Dr. 5,000

By Building A/c 40,000

Building A/c Dr. 40,000

Liabilities Rs. Assets Rs.

To Creditors A/c 1,000

Revaluation A/c Dr. 1,000

By Creditors A/c 1,500

Creditors A/c Dr. 1,500

To Outstanding Expenses A/c 3,200

Revaluation A/c Dr. 3,200

Unrecorded Investments worth Rs.7,000 .

By Investments A/c 7,000

Investments A/c Dr. 7,000

To Provision for 3,000

Revaluation A/c Dr. 3,000

To Outstanding Expenses A/c 3,200 By Investments A/c 7,000

To Outstanding Expenses A/c 3,200 By Investments A/c 7,000

• Debit side for Losses / Credit Side for Profits

• Divide the Profit /Loss of Revaluation in Old

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