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Rs. 2000 out of total creditors …

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Rs. 2000 out of total creditors rs 20000 are not to be paid

Posted by Abhishek Nag 6 years, 10 months ago

CBSE > Class 12 > Accountancy

1 answers

Poornika Aggarwal 6 years, 9 months ago

Creditors are a liability, thus having credit balance. Since here they are not to be paid Rs. 2,000, the liability stands reduced by Rs. 2,000. To reduce a liability, we must debit it to reduce its balance. Also, this is a gain to the firm, thus revaluation account should be credited (being a nominal account in nature). Hemce the folowing journal entry:

Creditors a/c Dr. 2,000

To Revaluation a/c 2,000

(Being creditors of 2,000 not to be paid)

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