CBSE 2025, Compartment, Set 1

Question

Mohit and Rohit were partners in a firm sharing profits and losses in the ratio of 3: 2. On $1^{st}$ April, 2024, they admitted Radha for $\frac{1}{5}^{th}$ share in the profits of the firm. Before Radha's admission, the Balance Sheet of Mohit and Rohit showed furniture at ₹6,30,000. On admission of Radha, it was found undervalued by 10%. The journal entry for the above adjustment on Radha's admission will be: A). Revaluation A/c Dr. 63,000 To Furniture A/c 63,000 B). Furniture A/c Dr. 70,000 To Revaluation A/c 70,000 C). Revaluation A/c Dr. 70,000 To Furniture A/c 70,000 D). Furniture A/c Dr. 63,000 To Revaluation A/c 63,000

Edvaya · Accepted Answer

The correct answer is Furniture A/c Dr. 70,000 To Revaluation A/c 70,000. Book Value of Furniture = ₹6,30,000. Since it is undervalued by 10%, Book Value = 90% of True Value. True Value = $6,30,000 / 0.90 = ₹7,00,000$. Increase in value = $7,00,000 - 6,30,000 = ₹70,000$. Increase in asset is credited to Revaluation A/c. Hence: Furniture A/c Dr. 70,000 To Revaluation A/c 70,000.

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Accountancy > Accounting For Partnership Firms > Admission Of A Partner

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