Question 60 Chapter 2 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 60 Chapter 2 of +2-A

Question 60 Chapter 2 of +2-A

60. Azad and Benny are equal partners. Their capitals are 40,000 and 80,000 respectively. After  the accounts for the year had been prepared, it was noticed that interest @ 5% p.a. as provided in the Partnership Deed was not credited to their Capital Accounts before distribution of profits. It is decided to pass an adjustment entry in the beginning of the next year.
Record the necessary Journal entry.

The solution of Question 60 Chapter 2 of +2-A

:

Date Particulars
L.F. Debit Credit
  Azad’s Capital A/c Dr   1,000  
  To Benny’s Capital A/c       1,000
  (Being adjustment of Interest on partners′ capital made)        

 


Working Note: –

Statement Showing Adjustment of Profit required
Particulars

Azad

Benny
Total
Interest on Capital @5% p.a. 2,000 4,000 6,000
Less: Profits wrongly distributed to the extent of interest amount 3,000 3,000 6,000
  -1,000  1,000
 

Azad get less amount, so we have to credit his capital a/c with difference amount

 

Benny get extra so we have to debit his capital a/c with difference amount

 

 

Calculation of Interest on Azad’s & Benny’s Capital
Interest on Capital = Opening Capital X Rate of Interest


Interest on Azad’s Capital 40,000 X 5
100

Interest on Azad’s Capital = 2,000/-

 

Interest on Benny’s Capital 80,000 X 5
100

Interest on Benny’s Capital = 4,000/-

 

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)

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

 

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 1 min - Question 60 Chapter 2 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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