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Question -

Mohan, Vijay and Anil are partners, the balance on their capital accounts being ₹ 30,000, ₹ 25,000 and ₹ 20,000 respectively. In arriving at these figures, the profits for the year ended March 31, 2017 amounting to Rupees 24,000 had been credited to partners in the proportion in which they shared profits. During the tear their drawings for Mohan, Vijay and Anil were ₹ 5,000, ₹ 4,000 and ₹ 3,000, respectively. Subsequently, the following omissions were noticed:

(a)

Interest on Capital, at the rate of 10% p.a., was not charged.

(b)

Interest on Drawings: Mohan ₹ 250, Vijay ₹ 200, Anil ₹ 150 was not recorded in the books.
Record necessary corrections through journal entries.



Answer -

 

Mohan

Vijay

Anil

Closing Capital

30,000

25,000

20,000

Add: Drawings

5,000

4,000

3,000

Less: Profit (1:1:1)

(8,000)

(8,000)

(8,000)

Opening Capital

27,000

21,000

15,000

 

Intereston Capital

Mohan = 27,000 ×

10

 = ₹ 2,700

100

 

Vijay = 21,000 ×

10

 = ₹ 2,100

100

 

Anil = 15,000 ×

10

 = ₹ 1,500

100

 

Adjustmentof Profit

 

Mohan

Vijay

Anil

 

Total

Interest on Capital (on Opening Capital)

2,700

2,100

1,500

 

6,300

Interest on Drawings

(250)

(200)

(150)

 

(600)

 

2,450

1,900

1,350

 

5,700

Wrong distribution

(1,900)

(1,900)

(1,900)

=

(5,700)

 

550

NIL

(550)

 

 

 

AdjustingJournal Entry

Date

 

Particulars

 

L.F

Debit Amount

₹

Credit Amount

₹

 

 

 

 

 

 

 

Anil’s Capital A/c

Dr.

 

550

 

 

To Vijay’s Capital A/c

 

 

 

550

 

(Adjustment of profit made)

 

 

 

 

 

 

 

 

 

 

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