Question

Mannu and Shristhi are partners in a firm sharing profit in the ratio of 3 : 2. Following is the balancesheet of the firm as on 31st March, 2018:

Mannu's capital:- 30,000 Mannu;s drawings:- 4000

Shristhi's capital:- 10,000 Shristhi's drawings:- 2000
(a) Profit for the year ended 31st March, 2018 was Rs. 5,000 which was divided in the agreed ratio,

(b) Interest @ 5% p.a. on capital and @ 6% pa. on drawings was inadvertently enquired.

(c) Adjust interest on drawings on an average basis for 6 months.

Give the adjustment entry. Notes;- Drawings already adjusted in the capital.

Answer 1

Calculation of Opening Capital

Mannu Shristhi

Closing capital 30000 10000

Add:-Drawings are debited nil nil

Less:-profit (3000) (2000)

Opening Capital 27000 8000

Interest on capital@5% 1350 400

Interest on drawings@6% 4000*6%*6/12 2000 *6%*6/12

=120 = 60

Journal entry is:-

Shristhi's capital A/c Dr. 288

To Mannu's capital A/c 288

(Being adjustment entry passed)

Table showing Adjustments to be made

Particulars	Mannu's Capital	Shristhi's capital
Interest on capital	1350	400
Less:- Interest on Drawings	120	60
Profit to be distributed (5000-1350-400+60+120) =3430	2058	1372
Total	3288	1712
Less:wrong credit of interest	(3000)	(2000)
Net effect	288	(288)