4
Question
P and Q were partners in a firm sharing profits and losses equally. Their fixed capitals were ₹ 2,00,000 and ₹ 3,00,000 respectively. The Partnership Deed provided for interest on capital @ 12% per annum. For the year ended 31st March, 2016, the profits of the firm were distributed without providing interest on capital.
Pass necessary adjustment entry to rectify the error.
Pass necessary adjustment entry to rectify the error.
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Solution
Adjusting Journal Entry
Journal
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
P’s Current A/c
Dr.
6,000
To Q’s Current A/c
6,000
(Interest on capital omitted, now adjusted.)
Working Notes:
Statement Showing Adjustment
Particulars
P
Q
Total
Interest on Capital @ 12%
24,000
36,000
(60,000)
Less: Profits wrongly distributed to the extent of interest amount
(30,000)
(30,000)
60,000
Net Effect
(6,000)
6,000
NIL
|
Journal
|
|||||
|
Date
|
Particulars
|
L.F.
|
Debit
Amount
(₹) |
Credit
Amount
(₹) |
|
| P’s Current A/c |
Dr.
|
|
6,000
|
|
|
|
To Q’s Current A/c
|
|
|
6,000
|
||
| (Interest on capital omitted, now adjusted.) |
|
|
|||
Working Notes:
|
Statement Showing Adjustment |
|||
|
Particulars |
P |
Q |
Total |
| Interest on Capital @ 12% |
24,000 |
36,000 |
(60,000) |
| Less: Profits wrongly distributed to the extent of interest amount |
(30,000) |
(30,000) |
60,000 |
| Net Effect |
(6,000) |
6,000 |
NIL |
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