On 31st March, 2018, Capital Accounts of $E, M$ and $A$ after making adjustments for profits, drawings, etc., were as $E - R s . 8, 00, 000; M - R s . 6, 00, 000$ and $A - R s . 4, 00, 000$ . Subsequently, it was found that interest on capital and interest on drawings had been omitted. The partners were entitled to interest on capital @ $5 %$ p.a. Drawings during the year were: $E - R s . 2, 00, 000; M - R s . 1, 50, 000$ and $A - R s . 90, 000$ . Interest on drawings chargeable to the partners were: $E - R s . 5, 000; M - R s . 3, 600$ and $A - R s . 2, 000$ . The net profit during the year amounted to $R s . 12, 00, 000$ . The profit-sharing ratio of the partners was $3 : 2 : 1$ .
Pass necessary adjustment entry for rectifying the above errors of omission. Show your workings.

Open in App

Solution

Journal entry to be passed:-
E's capital A/c Dr. 5700
To M's capital A/c 100
To A's capital A/c 5600
(Being Adjustment entry passed)

Calculation of Opening Capital
E M A
Closing Capital 8,00,000 6,00,000 4,00,000
Add:-Drawings 2,00,000 1,50,000 90,000
Less:Profits Credited (6,00,000) (4,00,000) (2,00,000)
Opening Capital 4,00,000 3,50,000 2,90,000
Interest on Capital@5% 20,000 17,500 14,500

Table showing Adjustments to be Made
Particulars E M A
Interest on capital 20,000 17,500 14,500
Interest on drawings (5000) (3600) (2000)
Profit to be credited 5,79,300 3,86,200 1,93,100
Profit wrongly credited (6,00,000) (4,00,000) (2,00,000)
Net Adjustment (5700) 100 5600

Suggest Corrections

Similar questions

On March 31, 2014 the capital accounts of Elvin, Monu and Ahmed after making adjustments for profits, drawings, etc. were as, Elvin - Rs 80,000; Monu - Rs 60,000; and Ahmed - Rs 40,000. Subsequently, it was discovered that interest on capital and interest on drawings had been omitted. The partners were entitled to interest on capital at 5% p.a. The drawings during the year were : Elvin - Rs 20,000; Monu - Rs 15,000; and Ahmed - Rs 9,000. Interest on drawings chargeable to the partners was Elvin - Rs 500; Monu - Rs 360 and Ahmed - Rs 200. The net profit for the year ended 31st March, 2014 amounted to Rs 1,20,000. The profit sharing ratio of the partners was 3:2:1.

Record the necessary adjustment entry for rectifying the above errors of omission. Show your workings.

On March 31, 2017 the balance in the capital accounts of Eluin, Monu and Ahmed, after making adjustments for profits, drawing, etc; were Rs 80,000, Rs 60,000 and Rs 40,000 respectively. Subsequently, it was discovered that interest on capital and interest on drawings had been omitted. The partners were entitled to interest on capital @ 5% p.a. The drawings during the year were Eluin Rs 20,000; Monu, Rs 15,000 and Ahmed, Rs 9,000. Interest on drawings chargeable to partners were Eluin Rs 500, Monu Rs 360 and Ahmed Rs 200. The net profit during the year amounted to Rs 1,20,000. The profit sharing ratio was 3 : 2 : 1. Pass necessary adjustment entries.

On March 31, 2006 the balance in the capital accounts of Eluin, Monu and Ahmed, after making adjustments for profits, drawing, etc were Rs 80,000, Rs 60,000 and Rs 40,000 respectively. Subsequently, it was discovered that interest on capital and interest on drawings has been omitted.

The partners were entitled to interest on capital @ 5% pa. The drawings during the year Eluin Rs 20,000; Monu, Rs 15000 and Ahmed, Rs 9,000. Interest on drawings chargeable to partners were Eluin Rs 500, Monu Rs 360 and Ahmed Rs 200. The net profit during the year amounted to Rs 1,20,000. The profit sharing ratio was 3:2:1. Pass necessary adjustment entries.

Q. On 31st March, 2014, the balances in the Capital Accounts of Saroj, Mahinder and Umar after making adjustments for profits and drawings, etc., were Rs. 80;000,Rs. 60,000 and Rs. 40,000 respectively. Subsequently it was discovered that the Interest on capital and drawings has been omitted. (a) The profit for the year ended 31st March, 2014 was Rs. 80,000;

(b) During the year Saroj and Mahinder each withdraw a sum of Rs. 24,000 in equal instalments in the end of each month and Umar withdrew Rs. 36,000.
(c) The interest on drawings was to be charged @ 5% pa. and interest on capital was to be allowed @ 10% p.a.

(d) The profit-sharing ratio among partners was 4 : 3 :1.

Showing your workings clearly, pass the necessary rectifying entry.

Q. On 31st March, 2014, balances in the Capital Accounts of Eleen, Monu and Ahmad after making adjustments for profits and drawings were

R s . 1, 60, 000, R s .1, 20, 000

and

R s . 80, 000

respectively. Subsequently, it was discovered that the interest on capital and drawings had been omitted.
(i) The profit for the year ended 31st March, 2014 was

R s . 40, 000

.
(ii) During the year, Eleen and Monu each withdrew a total sum of

R s . 24, 000

in equal instalments in the beginning of each month and Ahmad withdrew a total sum of

R s . 48, 000

in equal instalments at the end of each month.
(iii) The interest on drawings was to be charged @

5 %

p.a. and interest on capital was to be allowed @

10 %

p.a.
(iv) The profit-sharing ratio among the partners was

2 : 1 : 1

. Showing your working notes clearly, pass the necessary rectifying entry.

Join BYJU'S Learning Program

Particulars	E	M	A
Interest on capital	20,000	17,500	14,500
Interest on drawings	(5000)	(3600)	(2000)
Profit to be credited	5,79,300	3,86,200	1,93,100
Profit wrongly credited	(6,00,000)	(4,00,000)	(2,00,000)
Net Adjustment	(5700)	100	5600