Capitals of A, B and C as on 31st March, 2019 amounted to ₹ 90,000, ₹ 3,30,000 and ₹ 6,60,000 respectively. Profit of ₹ 1,80,000 for the year ended 31st March, 2019 was distributed in the ratio of 4 : 1 : 1 after allowing interest on Capital @ 10% p.a. During the year, each partner withdrew ₹ 3,60,000. The Partnership Deed was silent as to profit-sharing ratio but provided for interest on capital @ 12%.
Pass the necessary adjustment entry showing the working clearly.
Pass the necessary adjustment entry showing the working clearly.
In the books of A, B and C
Journal
Date
Particulars
L.F.
Debit Amount
(₹)
Credit Amount
(₹)
2019
Mar.31
A’s Capital A/c
Dr.
66,600
To B’s Capital A/c
30,000
To C’s Capital A/c
36,600
(Being adjustment made for interest on capital and profits)
Statement Showing Adjustment:
Particulars
A’s Capital A/c
B’s Capital A/c
C’s Capital A/c
Firm
Dr.
( ₹)
Cr.
( ₹)
Dr.
( ₹)
Cr.
( ₹)
Dr.
( ₹)
Cr.
( ₹)
Dr.
( ₹)
Cr.
( ₹)
Profits wrongly credited in the ratio 4:1:1(Dr.)
1,20,000
30,000
30,000
1,80,000
Interest on Capital wrongly credited @10% p.a. (Dr.)
33,000
66,000
99,000
1,98,000
Interest on Capital to be provided @12% p.a. (Cr.)
39,600
79,200
1,18,800
2,37,600
Profits to be credited in the ratio 1:1:1 (Cr.)
46,800
46,800
46,800
1,40,400
Balance to be adjusted
66,600 (Dr.)
30,000 (Cr.)
36,600 (Cr.)
NIL
Note: Since, there is no provision of interest on drawings in the partnership deed so we will not provide it.
Calculation of Opening Capital of the Partners:
Particulars
A
(₹)
B
(₹)
C
(₹)
Closing Capital of the partners
90,000
3,30,000
6,60,000
Add: Drawings made during the year
3,60,000
3,60,000
3,60,000
Less: Profits for the year
1,20,000
30,000
30,000
Opening Capital of the partners as on 1st April, 2017
3,30,000
6,60,000
9,90,000
Note: Interest on Capital is always computed on the opening capitals.
|
In the books of A, B and C Journal |
||||||
|
Date |
Particulars |
|
|
L.F. |
Debit Amount (₹) |
Credit Amount |
|
2019 Mar.31 |
|
|
|
|
|
|
|
|
To B’s Capital A/c |
|
|
|
|
30,000 |
|
|
To C’s Capital A/c |
|
|
|
|
36,600 |
|
|
(Being adjustment made for interest on capital and profits) |
|
|
|
|
|
Statement Showing Adjustment:
|
Particulars |
A’s Capital A/c |
B’s Capital A/c |
C’s Capital A/c |
Firm |
||||
|
|
Dr. ( ₹) |
Cr. ( ₹) |
Dr. ( ₹) |
Cr. ( ₹) |
Dr. ( ₹) |
Cr. ( ₹) |
Dr. ( ₹) |
Cr. ( ₹) |
|
Profits wrongly credited in the ratio 4:1:1(Dr.) |
1,20,000 |
|
30,000 |
|
30,000 |
|
1,80,000 |
|
|
Interest on Capital wrongly credited @10% p.a. (Dr.) |
33,000 |
|
66,000 |
|
99,000 |
|
|
1,98,000 |
|
Interest on Capital to be provided @12% p.a. (Cr.) |
|
39,600 |
|
79,200 |
|
1,18,800 |
2,37,600 |
|
|
Profits to be credited in the ratio 1:1:1 (Cr.) |
|
46,800 |
|
46,800 |
|
46,800 |
1,40,400 |
|
|
Balance to be adjusted |
66,600 (Dr.) |
30,000 (Cr.) |
36,600 (Cr.) |
NIL |
||||
Note: Since, there is no provision of interest on drawings in the partnership deed so we will not provide it.
Calculation of Opening Capital of the Partners:
|
Particulars |
A |
B |
C |
|
Closing Capital of the partners |
90,000 |
3,30,000 |
6,60,000 |
|
Add: Drawings made during the year |
3,60,000 |
3,60,000 |
3,60,000 |
|
Less: Profits for the year |
1,20,000 |
30,000 |
30,000 |
|
Opening Capital of the partners as on 1st April, 2017 |
3,30,000 |
6,60,000 |
9,90,000 |
Note: Interest on Capital is always computed on the opening capitals.
