Question

Mannu and Shristhi are partners in a firm sharing profit in the ratio of 3 : 2. Following information is of the firm as on 31st March 2019:

Liabilities		₹	Assets		₹
Mannu’s Capital	30,000		Drawings:
Shristhi’s Capital	10,000	40,000	Mannu	4,000
			Shristhi	2,000	6,000
			Other Assets		34,000
		40,000			40,000

Profit for the year ended 31st March, 2019 was ₹ 5,000 which was divided in the agreed ratio, but interest @ 5% p.a. on capital and @ 6% p.a. on drawings was inadvertently omitted. Adjust interest on drawings on an average basis for 6 months. Give the adjustment entry.

Answer 1

Adjusting Journal Entry

Date	Particular		L.F	Debit Amount (₹)	Credit Amount (₹)
2019 Mar.31	Shrishti's Capital A/c	Dr.		288
	To Mannu's Capital A/c				288
	(Adjustment of profit made)

Adjustment of Profit

	Mannu’s	Shrishti		Total
Interest on Capital	1,500	500	=	2,000
Less: Interest on Drawings	(120)	(60)	=	(180)
Right distribution of Rs 1,820	1,380	440	=	1,820
Less: Wrong distribution of Rs 1,820 (3 : 2)	(1,092)	(728)	=	(1,820)
Adjusted Profit	288	(288)	=	NIL