When bills discounted is dishonoured what will be its effect on Revaluation A/c and Why?
Dear Student
If discounted bill is dishonoured and the debtor is not Bad then their would be no impact on Revaluation A/c because see the journal entry on Dishonour of Bill :
Here considering debtor is good their would be no impact in the income or expense hance revaluation account is not effected .
But if Bill is dishonoured and Debtor became Bad then , Journal entry would be :
Here their is an impact on Revaluation because as the debtor became bad their is a loss to the firm and theredore Revaluation A/c is debited.
Regards
If discounted bill is dishonoured and the debtor is not Bad then their would be no impact on Revaluation A/c because see the journal entry on Dishonour of Bill :
| Debtor A/c | Dr | XXX | |
| To Bank A/c | XXX | ||
| (Being bill dishonoured) | |||
Here considering debtor is good their would be no impact in the income or expense hance revaluation account is not effected .
But if Bill is dishonoured and Debtor became Bad then , Journal entry would be :
| Revaluation A/c | Dr. | XXX | |
| To Bank A/c | XXX | ||
| (Being Discounted bill dishonoured) | |||
Here their is an impact on Revaluation because as the debtor became bad their is a loss to the firm and theredore Revaluation A/c is debited.
Regards