Partnership Accounts Adjustments – Unrecorded Assets

How adjustment written in Question (Taking example of investments)

1. Unrecorded investments of Rs 5000 are to be accounted
2. Unrecorded investments were valued at Rs 5000
3. There is an unrecorded investment worth Rs 5000
4. Investments of Rs 5000 not mentioned in Balance Sheet were to be taken into account

Meaning

1. Investments are assets
2. So there is some asset which is not recorded in books of accounts
3. It means that Book Value of such assets is NIL
4. Now we have to record asset in books
5. Book Value will increase and there will be profit

Journal Entry

• Investments A/c Dr.
  • To Revaluation A/c

As the assets value is increasing so there is profit on revaluation

Impact in Revaluation A/c

It will come on the credit side of revaluation A/c

Impact in Balance sheet

It will be added to the respective asset on the assets side of the balance sheet. There will be no entry on liabilities side.