Question

Ram, Shyam & Mohan are partners in a firm sharing profits & losses in the ratio of 2:1:2. Their fixed capitals were 3,00,000, 1,00,000 and 2,00,000 respectively. Interest on capital for the year ending 31st March, 2015 was credited to them @ 9% p.a. instead of 10% p.a. The profits for the year before charging interest was 2,50,000. Prepare necessary adjustment entry

• A. Shyam Cr 200 Mohan Dr 400 Ram Cr 600
• B. Ram Cr 400 Shyam Dr 200 Mohan Dr 600
• C. Shyam Dr 200 Mohan Dr 400 Ram Cr 600
• D. Ram Dr 400 Shyam Dr 200 Mohan Cr 600

Answer 1

The correct option is C

Shyam Dr 200 Mohan Dr 400 Ram Cr 600

Table Showing Adjustment

$\begin{array}{ccccc}& \text{Ram}& \text{Shyam}& \text{Mohan}& \text{Total}\\ & \text{(Rs)}& \text{(Rs)}& \text{(Rs)}& \\ \text{Interest already credited}@9\%& 27,000& 9,000& 18,000& 54,000\\ \text{Interest that should have been credited}@10\%& 30,000& 10,000& 20,000& 60,000\\ \text{Partners less credited}& 3,000& 1,000& 2,000& 6,000\\ \text{Debit profits which were reduced}& 2,400& 1,200& 2,400& 6,000\\ \text{by Rs 6,000 in the ratio}2:1:2& 600& 200& 400& \underset{–}{}\\ & \text{Cr.}& \text{Dr.}& \text{Dr.}& \underset{–}{}\end{array}$