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Question -

Mannu and Shristhi are partners in a firm sharing profit in the ratio of 3: 2. Following is the balance sheet of the firm as on March 31, 2017.

 

 

Amount

 

 

Amount

Liabilities

₹

Assets

₹

Mannu’s Capital

30,000

 

Drawings :

 

 

Shristhi’s Capital

10,000

40,000

Mannu

4,000

 

 

 

 

Shristhi

2,000

6,000

 

 

 

Other Assets

34,000

 

 

40,000

 

 

40,000
Profit for the year ended March 31, 2017 was ₹ 5,000 which was divided in the agreed ratio, but interest @ 5% p.a. on capital and @ 6% p.a. on drawings was inadvertently enquired. Adjust interest on drawings on an average basis for 6 months. Give the adjustment entry.



Answer -

Adjustmentof Profit

 

Mannu’s

Shrishti

 

Total

Interest on Capital

1,500

500

=

2,000

Less: Interest on Drawings

(120)

(60)

=

(180)

Right distribution of ₹ 1,820

1,380

440

=

1,820

Less: Wrong distribution of ₹ 1,820 (3 : 2)

(1,092)

(728)

=

(1,820)

Adjusted Profit

288

(288)

=

NIL

 

AdjustingJournal Entry

Date

 

Particulars

 

L.F

Debit Amount 

₹

Credit Amount 

₹

 

Shrishti’s Capital A/c

Dr.

 

288

 

 

To Mannu’s Capital A/c

 

 

 

288

 

(Adjustment of profit made)

 

 

 

 

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