A liability of Rs. 7,004 will be created against bills receivable discounted earlier but now dishonoured. What is the journal entry, effect in Revaluation Account, Partner's Capital Account and Balance Sheet?

Dear Student,

The impact of the transaction 'A liability of Rs. 7,004 will be created against bills receivable discounted earlier but now dishonoured' will be on Revaluation A/c and Balance Sheet only.

(a) Debit Revaluation A/c with Rs 7,004
(b) Show 'Liability against bills Discounted' as Rs 7,004 on the Liabilities side of the New Balance Sheet

Journal entry will be as follows.

 
Journal
Date Particulars L.F. Debit
Amount
(Rs)
Credit
Amount
(Rs)
           
           
  Revaluation A/c Dr.   7,004  
    To Liability against Bill Discounted       7,004
  (Liability against bill discounted debited to Revaluation A/c)        
           

 

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