Question 62 Chapter 2 of +2-A
62. Ram, Shyam and Mohan were partners in a firm sharing profits and losses in the ratio of 2: 1: 2.
Their capitals were fixed at 3,00,000, 1,00,000, 2,00,000. For the year ended 31st March, 2019, interest on capital was credited to them @ 9% instead of 10% p.a. The profit for the year before charging interest was 2,50,000.
Show your working notes clearly and pass necessary adjustment entry.
The solution of Question 62 Chapter 2 of +2-A:
| Date | Particulars |
L.F. | Debit | Credit | |
| Shyam’s Capital A/c | Dr | 200 | |||
| Mohan’s Capital A/c | Dr | 400 | |||
| To Ram’s Capital A/c | 600 | ||||
| (Being adjustment of Interest on partners′ capital made) | |||||
Working Note: –
| Statement Showing Adjustment of Profit required |
||||
| Particulars |
Ram |
Shyam | Mohan |
Total |
| Actual Amount of Interest on Capital @10% p.a. | 30,000 | 10,000 | 20,000 | 60,000 |
| Less: Wrong Amount of Interest on Capital @9% p.a. credited | 27,000 | 9,000 | 18,000 | 54,000 |
| Extra Amount credited | 3,000 | 1,000 | 2,000 | 6,000 |
| Less: Extra Amount credited in Profit sharing ratio i.e. 2:1:2 | 2,400 | 1,200 | 2,400 | 6,000 |
| Net effect | -600 | 200 | 400 | – |
|
Ram gets less amount, so we have to credit his capital a/c with difference amount
|
Mohan get extra so we have to debit his capital a/c with difference amount |
Sohan get extra so we have to debit his capital a/c with difference amount
|
||
Calculation of Actual Amount of Interest on Ram’s, Shyam’s, & Mohan’s Capital
Interest on Capital = Opening Capital X Rate of Interest
| Interest on Ram’s Capital | = | 3,00,000 | X | 10 |
| 100 |
Interest on Ram’s Capital =30,000/-
| Interest on Shyam’s Capital | = | 1,00,000 | X | 10 |
| 100 |
Interest on Shyam’s Capital = 10,000/-
| Interest on Mohan’s Capital | = | 2,00,000 | X | 10 |
| 100 |
Interest on Mohan’s Capital = 20,000 /-
Calculation of the Wrong Amount of Interest on Ram’s, Shyam’s, & Mohan’s Capital
Interest on Capital = Opening Capital X Rate of Interest
| Interest on Ram’s Capital | = | 3,00,000 | X | 9 |
| 100 |
Interest on Ram’s Capital = 27,000/-
| Interest on Shyam’s Capital | = | 1,00,000 | X | 9 |
| 100 |
Interest on Shyam’s Capital = 9,000/-
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| Interest on Mohan’s Capital | = | 2,00,000 | X | 9 |
| 100 |
Interest on Mohan’s Capital = 18,000 /-
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
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
