Question 58 Chapter 2 of +2-A - T.S. Grewal 12 Class Part

Question 58 Chapter 2 of +2-A

Table of Contents

The solution of Question 58 Chapter 2 of +2-A:

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

58. P and Q were partners in firm sharing profits and losses equally. Their fixed capitals were 2,00,000 and 3,00,000 respectively. The Partnership Deed provided for interest on capital@ 12% per annum. For the year ended 31st March 2016, the profits of the firm were distributed without providing interest on capital.
Pass necessary adjustment entry to rectify the error.

The solution of Question 58 Chapter 2 of +2-A:

Date	Particulars		L.F.	Debit	Credit
	P’s Capital A/c	Dr		6,000
	To Q’s Capital A/c				6,000
	(Being adjustment of Interest on partners′ capital made)

Working Note: –

Statement Showing Adjustment of Profit required
Particulars	P	Q	Total
Interest on Capital @ 12%	24,000	36,000	60,000
Less: Profits wrongly distributed to the extent of interest amount (Total amount of interest distributed in the profit ratio i.e. 1:1)	30,000	30,000	60,000
	-6,000	6,000	–

P gets extra so we have to debit his capital a/c with difference amount

Q gets less amount, so we have to credit his capital a/c with difference amount

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Calculation of Interest on P’s & Q’s Capital

Interest on Capital = Opening Capital X Rate of Interest

Interest on P’s Capital	=	2,00,000	X	12
				100

Interest on P’s Capital = 24,000/-

Interest on Q’s Capital	=	3,00,000	X	12
				100

Interest on Q’s Capital = 36,000/-
Also, Check out the solved question of previous Chapters: –

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
Chapter No. 3 – Goodwill: Nature and Valuation
Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
Chapter No. 5 – Admission of a Partner
Chapter No. 6 – Retirement/Death of a Partner
Chapter No. 7 – Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

Chapter No. 8 – Company Accounts – Accounting for Share Capital
Chapter No. 9 – Company Accounts – Issue of Debentures
Chapter No. 10 – Redemption of Debentures

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

Chapter No. 1 – Financial Statements of a Company
Chapter No. 2 – Financial Statement Analysis
Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
Chapter No. 4 – Accounting Ratios
Chapter No. 5 – Cash Flow Statement

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