Question

$X,Y$ and $Z$ are partners. They have omitted interest on capital @ $10\%$ p.a. for three years ended 31st March, 2018. Their fixed capitals on which interest was to be calculated throughout were: $X-Rs.10,000;Y-Rs.8,000$ and $Z-Rs.7,000$. Their profit-sharing ratios were: $2016-1:2:2;2017-5:3:2;2018-4:5:1$. The firm earned profit of $Rs.2,500$ in each year. Pass necessary adjustment Journal entry.

Answer 1

Adjusting Journal Entry is as follows:-

Y's current A/c Dr. 600

To X's current A/c 250

To Z's current A/c 350

(Being Adjustment entry passed)

Table Showing Net Adjustments to be Made

Year	X	Y	Z
Table 1	3000	2400	2100
Table 2	(2750)	(3000)	(1750)
Net Effect	250	(600)	350

Table 1- Amount to be credited as interest on capital

Particulars	X	Y	Z
For the year 2016	1000	800	700
For the year 2017	1000	800	700
For the year 2018	1000	800	700
Total	3000	2400	2100

Table 2- Amount Wrongly credited as profits

Particulars	X	Y	Z
Amount wrongly credited as profits
for the year 2016	500	1000	1000
for the year 2017	1250	750	500
for the year 2018	1000	1250	250
Total	2750	3000	1750