Exhibit 121 Accounting entries for revaluation Wendy and Yan Statement of

Exhibit 121 accounting entries for revaluation wendy

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Exhibit 12.1 Accounting entries for revaluation Wendy and Yan Statement of Financial Position as at 31 December 2015 $ $ $ Current assets Inventory 200,000 Trade receivables 200,000 Less Allowance for doubtful debts 10,000 190,000 Bank 130,000 520,000 LessCurrent liabilities: Trade payables 240,000 Net current assets 280,000 880,000
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Exhibit 12.1 Accounting entries for revaluation Wendy and Yan Statement of Financial Position as at 31 December 2015 $ $ $ Financed by: Capital accounts: Wendy Yan 300,000 150,000 450,000 Current accounts: Wendy Yan 230,000 200,000 430,000 880,000
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Exhibit 12.1 Accounting entries for revaluation The following assets were revalued on 1 January 2016: An extra allowance of $10,000 was to be made for doubtful debts. The value of other assets and liabilities remained unchanged. Entries in the revaluation account and capital accounts are shown as follows. $ Office equipment 700,000 Furniture and fittings 110,000 Inventory 180,000
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Exhibit 12.1 Accounting entries for revaluation Capital Wendy Yan Wendy Yan 2016 $ $ 2016 $ $ Jan 1 Balances b/f 300,00 0 150,000 Revaluation 2016 $ $ 2016 $ $200,000 – $180,000 $200,000 – $180,000 $700,000 – $450,000 $700,000 – $450,000 $150,000 – $110,000 $150,000 – $110,000 1 Allowance for doubtful debts 10,000 Jan 1 Balances c/d 420,00 0 210,00 0 420,00 0 210,00 0 420,00 0 210,000 1 Revaluation — Share of profit 120,00 0 60,000 Jan 1 Furniture and fittings 40,000 Jan 1 Office equipment 250,000 1 Inventories 20,000 Partners’ capital balance were increased by the profit on revaluation
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Exhibit 12.1 Accounting entries for revaluation Wendy and Yan Statement of Financial Position as at 1 January 2016 $ $ $ Non-current assets Office equipment 700,000 Furniture and fittings 110,000 810,000 Current assets Inventory 180,000 Trade receivables 200,000 Less Allowance for doubtful debts 20,000 180,000 Revalu ed Revalu ed Bank 130,000 490,000 Less Current liabilities: Trade payables 240,000 Net current assets 250,000 1,060,00 0 $10,000 + $10,000 (extra allowance) $10,000 + $10,000 (extra allowance)
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Exhibit 12.1 Accounting entries for revaluation Wendy and Yan Statement of Financial Position as at 1 January 2016 $ $ $ Capital account balances after revaluation Capital account balances after revaluation Financed by: Capital accounts: Wendy Yan 420,000 210,000 630,000 Current accounts: Wendy Yan 230,000 200,000 430,000 1,060,00 0
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Revaluation wording Learning Tips In public examinations, candidates should pay close attention to the wording concerning the change in the valuation of an asset. 1.Sometimes, the revalued amount is stated as a percentage of the asset’s original book value. Example 1 (ii) The motor vehicles were to be revalued to 80% of the book value and the equipment was to be revalued upwards by $20,000. (Extracted from HKCEE Principles of Accounts 2009, Section A Q4) i.e., net book value i.e., net book value This means a reduction in valuation of 20% (=100% - 80%) This means a reduction in valuation of 20% (=100% - 80%)
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Revaluation wording Learning Tips 2. Sometimes, revaluation may be stated as a percentage change in the value of asset. Example 2 (iii) Property was to be revalued at $2,320,000 and the net book value of equipment was to be decreased by 20%. (Extracted from HKDSE BAFS 2013, Paper 2A Section B Q4) In this question, the net book value of equipment was to be revalued downwards ‘by’ 20%.
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  • Spring '07
  • Smith
  • Balance Sheet, Generally Accepted Accounting Principles, partner, Financial Position

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