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Quantitative Aptitude

Simple Interest & Compound Interest

P, Q and R ...

Question

$P, Q$ and $R$ are partners in a firm. Their Capital Accounts stood at $R s . 30, 000; R s . 15, 000$ and $R s .15, 000$ respectively on 1st April, 2017.
As per the provisions of the Deed:
(i) $R$ was to be allowed a remuneration of $R s . 3, 000$ per annum,
(ii) Interest @ $5 %$ p.a. was to be provided on capital and
(iii) Profits were to be divided in the ratio of $2 : 2 : 1$ .
Ignoring the above terms, net profit of $R s .18, 000$ for the year ended 31st March, 2018 was distributed among the three partners equally.
Pass an adjustment entry to rectify the error. Show the workings clearly.

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Solution

Rectification entry is
Q's capital A/c Dr. 450
To P's capital A/c 300
To R's capital A/c 150
(Being adjustment entry passed)

TABLE SHOWING ADJUSTMENTS TO BE MADE
Particulars P Q R
Interest on capital to be credited 1500 750 750
Remuneration 3000
Profit to be credited 4800 4800 2400
Less Profit wrongly credited (6000) ( 6000) (6000 )
Net effect 300 (450) 150

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Particulars	P	Q	R
Interest on capital to be credited	1500	750	750
Remuneration			3000
Profit to be credited	4800	4800	2400
Less Profit wrongly credited	(6000)	( 6000)	(6000 )
Net effect	300	(450)	150