admission of a partner

a b/e of 4000 which was previously discounted with the banker, was dishonoured on 31 march 2014 but no entry has been passed for that.
theres a b/r of 20000 in balance sheet
ques: effect of this on revaluation account

asked Jan 20, 2015 in Partnership-Admission by deepz (143 points) 1,979 views

1 Answer

0 votes
Dishonour of B/E will not in anyway impact revaluation because on dishonour of B/E entry to be passed is:

Debtors A/c   Dr.   4000

  To Bank                           4000

Due to this Debtors will increase and Bank A/c will reduce.  In case of bad debts only revaluation account is affected.
answered Jan 20, 2015 by jbsclasses (3,971 points)

your question is: in this question after dishonour theres increase in asset(B/R) and increase in liability (bank) so in a way theres change in assets and liabilities


You are wrong in saying that on dishonour Bill Receivables will increase.  Once any Bill of Exchange is dishonoured, it is returned to the drawee (so he becomes debtor).  Since this Bill of Exchange has been dishonoured, bank will deduct money from Drawer's account (bank account will reduce).  As there is no loss or gain, there will be no impact on Revaluation A/c.