On 31st March 2022 a firm had ₹1,50,000 debtors and a balance of ₹3,000 in the Provision for Bad Debts Account. On the same date, a new partner was admitted. It was decided to write off ₹2,000 as bad debts and maintain a provision of 5% for bad and doubtful debts on debtors. By what amount will the Revaluation Account be debited for maintaining the provision for bad and doubtful debts at 5% of debtors?

Correct option is A

Step 1: Debtors before adjustments = ₹1,50,000
Step 2: Bad debts to be written off = ₹2,000 Adjusted Debtors =
1,50,000-2,000=1,48,000
Step 3: Provision required @ 5%
1,48,000×5%=7,400
Step 4: Existing Provision = ₹3,000
Step 5: Effect on Revaluation Account Revaluation needs to be debited for:
· Additional provision required
· Plus the bad debts written off
So, total effect:
"Bad Debts (written off)"=2,000 "Additional Provision Required"=7,400-3,000=4,400
Total debit to Revaluation A/c =
2,000+4,400=6,400
Thus, the Revaluation Account will be debited by ₹6,400, making option (a) the correct answer.