A, B and C are partners in a firm. Net profit of the firm for the year ended 31st march, 2018 is ₹ 30,000, which has been duly distributed among the partners, in their agreed ratio of 3 : 1 : 1 respectively. It is discovered on 10th April, 2018 that the undermentioned transactions were not passed through the books of account of the firm for the year ended 31st March, 2018.
(a) Interest on Capital @ 6% per annum, the capital of A, B and C being ₹ 50,000; ₹ 40,000 and ₹ 30,000 respectively.
(b) Interest on drawings: A ₹ 350; B ₹ 250; C ₹ 150.
(c) Partners' Salaries: A ₹ 5,000; B ₹ 7,500.
(d) Commission due to A (for some special transaction) ₹ 3,000.
You are required to pass a Journal entry, which will not affect Profit and Loss Account of the firm and rectify the position of partners inter se.

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Solution

Journal

Particular

L.F.

Debit Amount
(₹)

Credit Amount
(₹)

A’s Capital A/c

Dr.

2,520

C’s Capital A/c

Dr.

2,740

To B’s Capital A/c

5,260

(Adjustment made)

Particular

A

B

C

Total

Interest on Capital @ 6% p.a.

3,000

2,400

1,800

(7,200)

Interest on Drawings

(350)

(250)

(150)

750

Salary

5,000

7,500

–

(12,500)

Commission

3,000

–

–

(3,000)

Profit (30,000 – 7,200 – 12,500 – 3,000 + 750)

4,830

1,610

1,610

(8,050)

Right Share

15,480

11,260

3,260

(30,000)

Wrong Share

(18,000)

(6,000)

(6,000)

30,000

Net Effect

2,520 (Dr.)

5,260 (Cr.)

2,740

(Dr.)

Nil

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(b) Interest on drawings: A ₹ 350; B ₹ 250; C ₹ 150.
(c) Partners' Salaries: A ₹ 5,000; B ₹ 7,500.
(d) Commission due to A (for some special transaction) ₹ 3,000.
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Journal
Particular		L.F.	Debit Amount (₹)	Credit Amount (₹)
A’s Capital A/c	Dr.		2,520
C’s Capital A/c	Dr.		2,740
To B’s Capital A/c				5,260
(Adjustment made)

Particular	A	B	C	Total
Interest on Capital @ 6% p.a.	3,000	2,400	1,800	(7,200)
Interest on Drawings	(350)	(250)	(150)	750
Salary	5,000	7,500	–	(12,500)
Commission	3,000	–	–	(3,000)
Profit (30,000 – 7,200 – 12,500 – 3,000 + 750)	4,830	1,610	1,610	(8,050)
Right Share	15,480	11,260	3,260	(30,000)
Wrong Share	(18,000)	(6,000)	(6,000)	30,000
Net Effect	2,520 (Dr.)	5,260 (Cr.)	2,740 (Dr.)	Nil