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Reya, Mona and Nisha shared profits in the ratio of 3 : 2 : 1. The profits for the last three years were ₹1,40,000, ₹84,000 and ₹1,06,000 respectively. These profits were by mistake shared equally. The error is now to be corrected. Give the necessary Journal entry for the same.
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Nisha’s Capital A/c Dr. | 55,000 | |||
| To Reya’s Capital A/c | 55,000 | |||
| (Adjustment of profit wrongly distributed) |
Statement Showing Adjustment
| Particulars | Reya | Mona | Nisha | Total |
|---|---|---|---|---|
| Right distribution (3 : 2 : 1) | 1,65,000 | 1,10,000 | 55,000 | 3,30,000 |
| Less: Wrong distribution (1 : 1 : 1) | (1,10,000) | (1,10,000) | (1,10,000) | (3,30,000) |
| Net Effect | +55,000 | Nil | –55,000 | Nil |
Total profit = ₹1,40,000 + ₹84,000 + ₹1,06,000 = ₹3,30,000.
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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