Question 61 Chapter 2 of +2-A
61. Ram, Mohan and Sohan sharing profits and losses equally have capitals of 1,20,000, 90,000 and 60,000 respectively. For the year ended 31st March 2019, interest was credited to them @ 6% instead of 5%.
Give adjustment Journal entry.
The solution of Question 61 Chapter 2 of +2-A:
| Date | Particulars |
L.F. | Debit | Credit | |
| Ram’s Capital A/c | Dr | 300 | |||
| To Sohan’s Capital A/c | 300 | ||||
| (Being adjustment of Interest on partners′ capital made) | |||||
Working Note: –
| Statement Showing Adjustment of Profit required |
||||
| Particulars |
Ram |
Mohan | Sohan |
Total |
| Actual Amount of Interest on Capital @5% p.a. | 6,000 | 4,500 | 3,000 | 13,500 |
| Less: Wrong Amount of Interest on Capital @6% p.a. credited | 7,200 | 5,400 | 3,600 | 16,200 |
| Extra Amount credited | – 1,200 | – 900 | – 600 | -2,700 |
| Less: Extra Amount credited in Profit sharing ratio i.e. 1:1:1 | 900 | 900 | 900 | -2,700 |
| -300 | – | 300 | – | |
|
Ram get extra so we have to debit his capital a/c with difference amount
|
|
Sohan get less amount, so we have to credit his capital a/c with difference amount
|
||
Calculation of Actual Amount of Interest on Ram’s, Mohan’s, & Sohan’s Capital
Interest on Capital = Opening Capital X Rate of Interest
| Interest on Ram’s Capital | = | 1,20,000 | X | 5 |
| 100 |
Interest on Ram’s Capital =6,000/-
| Interest on Mohan’s Capital | = | 90,000 | X | 5 |
| 100 |
Interest on Mohan’s Capital = 4,500/-
| Interest on Sohan’s Capital | = | 60,000 | X | 5 |
| 100 |
Interest on Sohan’s Capital = 3,000 /-
Calculation of the Wrong Amount of Interest on Ram’s, Mohan’s, & Sohan’s Capital
Interest on Capital = Opening Capital X Rate of Interest
| Interest on Ram’s Capital | = | 1,20,000 | X | 6 |
| 100 |
Interest on Ram’s Capital = 7,200/-
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| Interest on Mohan’s Capital | = | 90,000 | X | 6 |
| 100 |
Interest on Mohan’s Capital = 5,400/-
| Interest on Sohan’s Capital | = | 60,000 | X | 6 |
| 100 |
Interest on Sohan’s Capital = 3,600 /-
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
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
