A, B and C are partners in a firm. Net profit of the firm for the year ended 31st March, 2019 is ₹ 30,000, which has been duly distributed among the partners, in their agreed ratio of 3 : 1 : 1. It is noticed on 10th April, 2019 that the undermentioned transactions were not passed through the books of account of the firm for the year ended 31st March, 2019.
(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

Date

Particular

L.F.

Debit Amount
(₹)

Credit Amount
(₹)

2019

March 31

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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Similar questions

Q. 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.

The net profit of a firm for the year ended 31st March 2017, was Rs 30,000, which has been duly distributed amongst its three partners A, B and C in their agreed proportions of 3:1:1 respectively. It was discovered on 10th April 2017 that the undermentioned transactions were not passed through the books of accounts of the firm for the year ended 31st March 2017, which stood duly closed on that date:

(a) Interest on capital at 10% p.a.

(b) Interest on drawings : A Rs 350; B Rs 250; C Rs 150.

(d) Commission due to A on a special transaction, Rs 3,000.

The capital accounts of the partners on 1st April, 2016 were : A Rs 25,000; B Rs 20,000; C Rs 15,000.

You are required to suggest a journal entry to be passed on 10th April, 2017 which will not affect the Profit and Loss Appropriation Account of the firm for the year ended 31st March, 2017 and at the same time will rectify the position of the partners.

Q. A, B and C are partners sharing profits and losses in the ratio of A 1/2, B 3/10, C 1/5 after providing for interest @ 5% on their respective capitals, viz., A ₹ 50,000; B ₹ 30,000 and C ₹ 20,000 and allowing B and C a salary of ₹ 5,000 each per annum. During the year ended 31st March, 2019, A has drawn ₹ 10,000 and B and C in addition to their salaries have drawn ₹ 2,500 and ₹ 1,000 respectively. Profit and Loss Account for the year ended 31st March, 2019 showed a net profit of ₹ 45,000. On 1st April, 2018, the balances in the Current Accounts of the partners were A (Cr.) ₹ 4,500; B (Cr.) ₹ 1,500 and C (Cr.) ₹ 1,000. Interest is not charged on Drawings or Current Account balances. Show Partners' Capital and Current Accounts as at 31st March, 2019 after division of profits in accordance with the partnership agreement.

Q. A and B are partners sharing profits and losses in the ratio of 3 : 1. On 1st April, 2018, their capitals were: A ₹ 50,000 and B ₹ 30,000. During the year ended 31st March, 2019 they earned a net profit of ₹ 50,000. The terms of partnership are:

(a) Interest on capital is to allowed @ 6% p.a.
(b) A will get a commission @ 2% on turnover.
(c) B will get a salary of ₹ 500 per month.
(d) B will get commission of 5% on profits after deduction of all expenses including such commission.
Partners' drawings for the year were: A ₹ 8,000 and B ₹ 6,000. Turnover for the year was ₹ 3,00,000.
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Q. On 31st March, 2019, after the closing of the accounts, the Capital Accounts of P, Q and R stood in the books of the firm at ₹ 40,000; ₹ 30,000 and ₹ 20,000 respectively. Subsequently, it was noticed that interest on capital @ 5% had been omitted. Profit for the year ended 31st March, 2019 was ₹ 60,000 and the partners' drawings had been P – ₹ 10,000, Q – ₹ 7,500 and R – ₹ 4,500. Profit-sharing ratio of P, Q and R is 3 : 2 : 1. Give necessary adjustment entry.

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	Journal
Date	Particular		L.F.	Debit Amount (₹)	Credit Amount (₹)
2019 March 31	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