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Question 72 Chapter 2 of Class 12 Part - 1
72. Cand D are partners sharing profits and losses in the ratio of 3:1. Following is the Balance Sheet of the firm as at 31st March, 2017:
| Liabilities | Rs. | Assets | Rs. | |
| Sundry creditors | 20,000 | Fixed Assets | 1,02,000 | |
| C’s Capital A/c | 90,000 | Currents Assets | 20,000 | |
| D’s Capital A/c | 30,000 | Drawings : C | 12,000 | |
| D | 6,000 | 18,000 | ||
| 1,40,000 | 1,40,000 |
Profit for the year ended 31st March, 2017 was Rs. 24,000 divided between the partners in their profit sharing ratio, but interest on capital at 5% pa. and on drawings at 6 p.a. was inadvertently ignored. Give the necessary adjustment entry for the adjustment of interest. Interest on drawings may be calculated on an average basis for 6 months.
Statement showing calculation of opening capital
| Particulars |
C Rs. |
D Rs. |
|---|---|---|
| Capital at the end | 90,000 | 30,000 |
| Less: Share of Profit | 18,000 | 6,000 |
| Capitals in the beggining | 72,000 | 24,000 |
In the given problem, drawing have not been added to closing capitals as they were never deducted from the opening capitals
Interest on Capitals:
C = 72,000 ×5/100= Rs. 3,600
D = 24,000 ×5/100= Rs. 1,200
Interest on Drawings:
C = 12,000 ×6/100×6/12 = Rs. 360
D = 6,000 ×6/100×6/12 = Rs. 180
Table Adjustment
| Particulars |
C Rs. |
D Rs. |
Total Rs. |
|---|---|---|---|
| Interest on Capital A/c | 3,600 | 1,200 | 4,800 |
| Less: Interest on Drawings | 360 | 180 | 540 |
| (Cr.) (A) | 3,240 | 1,020 | 4,260 |
| Less: Net loss of the firm in the ratio of 3:2 (Dr.) (B) | 3,195 | 1,065 | 4,260 |
| Net Effect (A-B) | ( Dr.) 45 | (Cr.) 45 | NIL |
Adjustment Journal Entry
| Date | Particular | L . F |
Dr. ₹ | Cr. ₹ | |
|---|---|---|---|---|---|
| C’s Capital A/c | Dr. | 45 | |||
| To D’s Capital A/c | 45 | ||||
| (Being partners’ capital account adjusted for interest on capital and drawings ) |
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Also, Check out the solved question of all Chapters: -
Chapter No. 1 - Accounting Not for Profit Organisations
Chapter No. 2 - Partnership Accounts - I (Introduction)
Chapter No. 3 - Partnership Accounts - II (Goodwill: Nature and Valuation)
Chapter No. 4 - Partnership Accounts - III (Reconstitution of Partnership)
Chapter No. 5 - Partnership Accounts - IV (Admission of A Partner)
Chapter No. 6 - Partnership Accounts - V (Retirement and Death of A Partner)
Chapter No. 7 - Partnership Accounts - VI (Dissolution of Partnership Firm)
Chapter No. 8 - Company Accounts (Share Capital)
Chapter No. 9 - Company Accounts (Issue of Debentures)
Chapter No. 10 - Company Accounts (Redemption of Debentures)
Chapter No. 1 - Financial Statements of a Company
Chapter No. 2 - Financial Statement Analysis
Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
Chapter No. 4 - Ratio Analysis
Chapter No. 5 - Cash Flow Statement
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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