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:

Liabilities		₹	Assets	₹
Capitals:			Sundry Assets	1,20,000
Piya	80,000
Bina	40,000	1,20,000
		1,20,000		1,20,000

The profits ₹ 30,000 for the year ended 31st March, 2016 were divided between the partners without allowing interest on capital @ 12% p.a. salary to Piya @ ₹ 1,000 per month. During the year Piya withdrew ₹ 8,000 and Bina withdrew ₹ 4,000. Showing your working notes clearly, pass the necessary rectifying entry.

Answer 1

Journal
Particular		L.F.	Debit Amount (₹)	Credit Amount (₹)
Bina’s Capital A/c	Dr.		5,856
To Piya’s Capital A/c				5,856
(Adjustment made)

Particular	Piya	Bina	Total
Interest on Capital @ 12% p.a.	8,400	3,840	(12,240)
Salary	12,000	–	(12,000)
Profit (30,000 – 12,240 –12,000)	3,456	2,304	5,760
Right Share	23,856	6,144	(30,000)
Wrong Share	(18,000)	(12,000)	30,000
Net Effect	5,856 (Cr.)	5,856 (Dr.)	Nil

Working Notes:

Particular	Piya	Bina
Closing Capitals	80,000	40,000
Add: Drawings	8,000	4,000
Less: Profit Share	18,000	12,000
Opening Capital	70,000	32,000