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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
On 31st March, 2023, the capitals of Raghav and Diya stood at ₹4,00,000 and ₹3,00,000 respectively, after the necessary adjustments in respect of drawings and net profit. Subsequently, it was discovered that interest on capital @ 10% p.a. had been omitted. The net profit for the year ended 31st March, 2023 amounted to ₹1,00,000. During the year, Raghav’s drawings were ₹2,000 drawn at the beginning of each month, while Diya’s drawings were ₹3,000 drawn at the beginning of each quarter. Pass the necessary adjustment entry. (CBSE 2024)
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2023 Mar 31 | Diya’s Capital A/c Dr. | 5,600 | ||
| To Raghav’s Capital A/c | 5,600 | |||
| (Interest on capital @ 10% omitted, now adjusted) |
Calculation of Opening Capital
| Particulars | Raghav (₹) | Diya (₹) |
|---|---|---|
| Closing Capital | 4,00,000 | 3,00,000 |
| Add: Drawings | 24,000 | 12,000 |
| Less: Profit (1 : 1 of 1,00,000) | (50,000) | (50,000) |
| Opening Capital | 3,74,000 | 2,62,000 |
Interest on capital @ 10%: Raghav = ₹37,400; Diya = ₹26,200 (total ₹63,600). This was wrongly distributed equally (₹31,800 each), so the net adjustment is Raghav +₹5,600 (Cr.) and Diya –₹5,600 (Dr.).
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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