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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Mannu and Shristhi are partners in a firm sharing profits in the ratio of 3 : 2. As per the firm’s Balance Sheet as on 31st March, 2025, their capitals were Mannu ₹3,00,000 and Shristhi ₹1,00,000, and their drawings (shown as an asset) were Mannu ₹40,000 and Shristhi ₹20,000. Profit for the year ended 31st March, 2025 was ₹50,000, which was divided in the agreed ratio, but interest @ 5% p.a. on capital and @ 6% p.a. on drawings was inadvertently omitted. Adjust interest on drawings on an average basis for 6 months. Give the adjustment entry.
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2025 Mar 31 | Shristhi’s Capital A/c Dr. | 2,880 | ||
| To Mannu’s Capital A/c | 2,880 | |||
| (Interest on capital and on drawings omitted, now adjusted) |
Statement Showing Adjustment
| Particulars | Mannu (₹) | Shristhi (₹) | Total (₹) |
|---|---|---|---|
| Interest on Capital @ 5% (on opening 2,70,000 / 80,000) | 13,500 | 4,000 | 17,500 |
| Less: Interest on Drawings @ 6% (6 months) | (1,200) | (600) | (1,800) |
| Right Share | 12,300 | 3,400 | 15,700 |
| Less: Wrongly distributed as profit (3 : 2) | (9,420) | (6,280) | (15,700) |
| Net Effect | +2,880 (Cr.) | –2,880 (Dr.) | Nil |
Opening capital = capital per Balance Sheet – profit already credited (Mannu ₹30,000; Shristhi ₹20,000).
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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