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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
The capitals of Kajal, Neerav and Alisha as on 31st March, 2025 amounted to ₹90,000, ₹3,30,000 and ₹6,60,000 respectively. Profit of ₹1,80,000 for the year ended 31st March, 2025 was distributed in the ratio of 4 : 1 : 1 after allowing interest on capital @ 10% p.a. During the year, each partner withdrew ₹3,60,000. The Partnership Deed was silent as to the profit-sharing ratio but provided for interest on capital @ 12%. Pass the necessary adjustment entry showing the working clearly.
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2025 Mar 31 | Kajal’s Capital A/c Dr. | 66,000 | ||
| To Neerav’s Capital A/c | 30,000 | |||
| To Alisha’s Capital A/c | 36,000 | |||
| (Adjustment for interest on capital and profit) |
Calculation of Opening Capital
| Particulars | Kajal (₹) | Neerav (₹) | Alisha (₹) |
|---|---|---|---|
| Closing Capital | 90,000 | 3,30,000 | 6,60,000 |
| Add: Drawings | 3,60,000 | 3,60,000 | 3,60,000 |
| Less: Profit credited (4 : 1 : 1) | (1,20,000) | (30,000) | (30,000) |
| Opening Capital | 3,30,000 | 6,60,000 | 9,90,000 |
Statement Showing Adjustment
| Particulars | Kajal | Neerav | Alisha | Total |
|---|---|---|---|---|
| Interest on Capital @ 12% + correct profit (equal) → Right Share | 86,400 | 1,26,000 | 1,65,600 | 3,78,000 |
| Less: Wrongly credited (IoC @ 10% + profit 4 : 1 : 1) | (1,53,000) | (96,000) | (1,29,000) | (3,78,000) |
| Net Effect | –66,000 (Dr.) | +30,000 (Cr.) | +36,000 (Cr.) | Nil |
Working Note: Interest on capital @ 12% = Kajal ₹39,600; Neerav ₹79,200; Alisha ₹1,18,800. Remaining profit = ₹3,78,000 – ₹2,37,600 = ₹1,40,400, shared equally (₹46,800 each). No interest on drawings, as the deed is silent.
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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