$A, B$ and $C$ were partners. Their capitals were $A - R s . 30, 000; B - R s . 20, 000$ and $C - R s . 10, 000$ respectively. According to the Partnership Deed, they were entitled to an interest on capital at $5 %$ p.a. In addition, $B$ was also entitled to draw a salary of $R s . 500$ per month. $C$ was entitled to a commission of $5 %$ on the profits after charging the interest on capital, but before charging the salary payable to $B$ . Net profit for the year was $R s . 30, 000$ distributed in the ratio of capitals without providing for any of the above adjustments. The profits were to be shared in the ratio of $5 : 2 : 3$ .
Pass necessary adjustment entry showing the Workings clearly.

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Solution

Rectification Entry is as follows:-
A's current A/c Dr. 3675
To B's current A/c 930
To C's capital A/c 2745
(Being adjustments made)

Notes:-Capitals of the partners are assumed to be fixed.

Table Showing Adjustments To be Made
Particulars A B C
Interest on capital to be provided@5% 1500 1000 500
Salary(50012) 6000
Commission (30,000-`1500-1000-500)5/100 1350
Profits to be distributed 5:3:2
(30,000-3000-6000-1385) 9825 3930 5895
Total 11,325 10930 7745
Less:profits wrongly credited 3:2:1
Net Adjustment ( 15,000)
(3675) (10,000)
930 (5,000)
2745

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Particulars	A	B	C
Interest on capital to be provided@5%	1500	1000	500
Salary(500*12)		6000
Commission (30,000-`1500-1000-500)*5/100			1350
Profits to be distributed 5:3:2 (30,000-3000-6000-1385)	9825	3930	5895
Total	11,325	10930	7745
Less:profits wrongly credited 3:2:1 Net Adjustment	( 15,000) (3675)	(10,000) 930	(5,000) 2745