Question

Piya and Bina are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following was the Balance Sheet of the firm as on 31st March, 2016: Capitals of Piya and Bina are 30,000 and 20,000.
The profit was Rs. 30,000 for the year ended 31st March, 2016 were divided between the partners without allowing interest on capital @ 12%. p.a. and salary to.Piya @ Rs. 1,000 per month., During the year Piya withdrew 8,000 and Bina withdrew 4000. Showing your working notes clearly, pass the necessary rectifying entry.

Answer 1

Calculation of Opening Capital

Piya Bina

Closing Capital 30,000 20,000

Add:-drawings 8000 4000

Less:profits (18000) (12000)

Opening capital 20,000 12,000

Interest on capital@12% 2400 1440

Profits to be allocated=30,000-2400-1440-12000=14160

TABLE SHOWING ADJUSTMENTS TO BE MADE

Particulars	Piya	Bina
Interest on capital	2400	1440
salary	12000
Right distribution of profit	8496	5664
Total	22896	7104
Less: wrong distribution of profit	(18000)	(12000)
Net adjustment	4896	(4896)

Adjustment entry will be :

Piya's Capital A/c Dr. 4896

To Bina's Capital A/c 4896