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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Piya and Bina are partners in a firm sharing profits and losses in the ratio of 3 : 2. Their capitals as per the Balance Sheet as on 31st March, 2016 were Piya ₹80,000 and Bina ₹40,000. The profit ₹30,000 for the year ended 31st March, 2016 was divided between the partners without allowing interest on capital @ 12% p.a. and salary to Piya @ ₹1,000 per month. During the year Piya withdrew ₹8,000 and Bina withdrew ₹4,000. Showing your working notes clearly, pass the necessary rectifying entry.
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Bina’s Capital A/c Dr. | 5,856 | |||
| To Piya’s Capital A/c | 5,856 | |||
| (Omission of interest on capital and salary, now adjusted) |
Statement Showing Adjustment
| Particulars | Piya (₹) | Bina (₹) | Total (₹) |
|---|---|---|---|
| Interest on Capital @ 12% (on opening 70,000 / 32,000) | 8,400 | 3,840 | 12,240 |
| Salary to Piya | 12,000 | – | 12,000 |
| Share of correct profit (3 : 2 of 5,760) | 3,456 | 2,304 | 5,760 |
| Right Share | 23,856 | 6,144 | 30,000 |
| Less: Wrongly distributed (3 : 2) | (18,000) | (12,000) | (30,000) |
| Net Effect | +5,856 (Cr.) | –5,856 (Dr.) | Nil |
Opening capital = closing + drawings – profit share: Piya = ₹80,000 + ₹8,000 – ₹18,000 = ₹70,000; Bina = ₹40,000 + ₹4,000 – ₹12,000 = ₹32,000.
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.70 - 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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