Mohan, Vijay and Anil are partners, the balances of their Capital Accounts being Rs. 30,000, Rs. 25,000 and Rs.20,000 respectively. In arriving at these figures, the profits for the year ended 31st March, 2016, Rs. 24,000 had already been credited to partners in the proportion in which they shared profits. Their drawings were Rs. 5,000 (Mohan), Rs. 4,000 (Vijay) and Rs. 3,000 (Anil) during the year. Subsequently, the following omissions were noticed and it was decided to bring them into account: (a) Interest on capital @ 10% pa. (b) interest on drawings: Mohan Rs. 250, Vijay, Rs. 200 and Anil Rs. 150. Make necessary corrections through a Journal entry and show your workings clearly.

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Solution

Calculation of capital at the beginning
Mohan Vijay Anil
Capital at the end 30000 25000 20000
Add Drawings 5000 4000 3000
Less:profits (8000) (8000) (8000)
Capital at the beginning 27000 21000 15000
Interest on capital@10% 2700 2100 1500

Adjustment entry is as follows:-
Anil's Capital A/c Dr. 550
To Mohan's Capital A/c 550
(Being adjustment entry passed)

Table showing adjustments to be made
Interest on capital 2700 2100 1500
Less:Interest on drawings (250) (200) (150)
Right distribution 2450 1900 1350
Less:wrong distribution of profits (1900) (1900) (1900)
Adjustments 550 nil (550)

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Mohan, Vijay and Anil are partners, the balance on their capital accounts being Rs 30,000, Rs 25,000 and Rs 20,000 respectively. In arriving at these figures, the profits for the year ended March 31, 2007 amounting to Rs 24,000 had been credited to partners in the proportion in which they shared profits. During the year their drawings for Mohan, Vijay and Anil were Rs 5,000, Rs 4,000 and Rs 3,000 respectively. Subsequently, the following omissions were noticed

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(a) Interest on capital @ 10% p.a.
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Interest on capital	2700	2100	1500
Less:Interest on drawings	(250)	(200)	(150)
Right distribution	2450	1900	1350
Less:wrong distribution of profits	(1900)	(1900)	(1900)
Adjustments	550	nil	(550)