How is bad debts recovered accounted in revaluation account and balance sheet while admission of a partner.
Dear Student
Bad Debts recovered are the Gains for the organisation. During the admission of any partner, as all the Reserves and Accumulated profits , Gains and Losses are transferred to revaluation A/c , Bad debts recovered account is also transferred to revaluation account . Therefore this account does not appear in balance sheet apart from the cash that is added due to recovery of Bad debts .
Following journal entry would help you to understand better:
Regards
Bad Debts recovered are the Gains for the organisation. During the admission of any partner, as all the Reserves and Accumulated profits , Gains and Losses are transferred to revaluation A/c , Bad debts recovered account is also transferred to revaluation account . Therefore this account does not appear in balance sheet apart from the cash that is added due to recovery of Bad debts .
Following journal entry would help you to understand better:
Cash A/c | Dr. | XXX | |
To Bad Debts Recovered A/c | XXX | ||
(Being bad debts recovered) | |||
Bad debts Recovered A/c | Dr. | XXX | |
To Revaluation A/c | XXX | ||
(Being Bad debts recovered account closed in Revaluation A/c) |
Regards