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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Mudit, Sudhir and Uday are partners in a firm sharing profits in the ratio of 3 : 1 : 1. Their fixed capital balances are ₹4,00,000, ₹1,60,000 and ₹1,20,000 respectively. Net profit for the year ended 31st March, 2018 distributed amongst the partners was ₹1,00,000, without taking into account the following adjustments: (a) Interest on capital @ 2.5% p.a.; (b) Salary to Mudit ₹18,000 p.a. and commission to Uday ₹12,000; (c) Mudit was allowed a commission of 6% of the divisible profit after charging such commission. Pass a rectifying Journal entry in the books of the firm. Show workings clearly. (CBSE Sample Paper 2019)
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Sudhir’s Current A/c Dr. | 6,000 | |||
| To Mudit’s Current A/c | 1,000 | |||
| To Uday’s Current A/c | 5,000 | |||
| (Adjustment entry for rectification of errors) |
Statement Showing Adjustment
| Particulars | Mudit | Sudhir | Uday | Total |
|---|---|---|---|---|
| Interest on Capital @ 2.5% | 10,000 | 4,000 | 3,000 | 17,000 |
| Salary / Commission | 18,000 | – | 12,000 | 30,000 |
| Mudit’s Commission | 3,000 | – | – | 3,000 |
| Share of correct profit (3 : 1 : 1 of 50,000) | 30,000 | 10,000 | 10,000 | 50,000 |
| Right Share | 61,000 | 14,000 | 25,000 | 1,00,000 |
| Less: Wrongly distributed (3 : 1 : 1) | (60,000) | (20,000) | (20,000) | (1,00,000) |
| Net Effect | +1,000 (Cr.) | –6,000 (Dr.) | +5,000 (Cr.) | Nil |
Working Note: Divisible profit = ₹1,00,000 – (₹17,000 + ₹18,000 + ₹12,000) = ₹53,000. Mudit’s commission = ₹53,000 × 6/106 = ₹3,000; profit for distribution = ₹50,000.
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.
This guide covers "T.S. Grewal Class 12 Chapter 1 Q.69 - Accounting for Partnership Firm Fundamentals", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 1 - Accounting for Partnership Firm – Fundamentals.
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