Question -
| (i) | Interest on Capital @ 5% p.a. |
| (ii) | Interest on drawings amounting to X ₹ 700, Y ₹ 500 and Z ₹ 300. |
| (iii) | Partner’s Salary : X ₹ 1000, Y ₹ 1500 p.a. |
The capital accounts of partners were fixed as: X ₹1, 00,000, Y ₹ 80,000 and Z ₹ 60,000. Record the adjustment entry.
Answer -
PastAdjustment
| | X | Y | Z | | Total |
| Interest on Capital | 5,000 | 4,000 | 3,000 | = | 12,000 |
| Less: Interest on Drawings | (700) | (500) | (300) | = | (1,500) |
| Add: Partner’s Salaries | 1,000 | 1,500 | NIL | = | 2,500 |
| Right distribution of ₹ 13,000 | 5,300 | 5,000 | 2,700 | = | 13,000 |
| Less: Wrong distribution of ₹ 13,000 (3:1:1) | (7,800) | (2,600) | (2,600) | = | (13,000) |
| | (2,500) Dr. | 2,400 Cr | 100 Cr | = | NIL |
Explanation:
Capitalhave credit balance if it deducted will be debited and if it is added itwill be credited.
Here X wrongly takenexcess ₹ 2,500 hence ₹ 2,500 will be deducted from X capital Account on theother hand Y and Z taken less amount as they should have been taken, hencecapital account of Y and Z will be added.
| Date | Particulars | | L.F | Debit Amount ₹ | Credit Amount ₹ |
| | X’s Capital A/c | Dr. | | 2,500 | |
| | | To Y’s Capital A/c | | | | 2,400 |
| | | To Z’s Capital A/c | | | | 100 |
| | (Profit adjusted among partners) | | | | |
| | | | | | |