Question 63 Chapter 2 of +2-A
63. Mita and Usha are partners in firm sharing profits in the ratio of 2 : 3. Their Capital Accounts as on 1st April 2015 showed balances of 1,40,000 and 1,20,000 respectively. The drawings of Mita and Usha during the year 2015-16 were 32,000 and 24,000 respectively. Both the amounts were withdrawn on 1st January 2016. It was subsequently found that the
following items had been omitted while preparing the final accounts for the year ended 31st March 2016:
- Interest on Capital @ 6% p.a.
- Interest on Drawings @ 6% p.a.
- Mita was entitled to a commission of 8,000 for the whole year.
Showing your working clearly, pass a rectifying entry in the books of the firm.
The solution of Question 63 Chapter 2 of +2-A:
| Date | Particulars |
L.F. | Debit | Credit | |
| Usha’s Capital A/c | Dr | 200 | |||
| To Mita’s Capital A/c | 600 | ||||
| (Being adjustment of Interest on partners′ capital made) | |||||
Working Note: –
| Statement Showing Adjustment of Profit required |
|||
| Particulars | Mita |
Usha |
Total |
| Amount of Interest on Capital @6% p.a.*2 | 8,400 | 7,200 | 15,600 |
| Add: Commission | 8,000 | – | 8,000 |
| Less: Amount of Interest on Drawing @6% p.a.*3 | – 480 | – 360 | – 840 |
| Actual total amount due – will be distributed as | 15,920 | 6,840 | 22,760 |
| Less: – Wrongly total amount distributed in the profit-sharing ration i.e. 2: 3 | – 9,104 | – 13,656 | 22,760 |
| 200 | 400 | – | |
|
Mita get less amount, so we have to credit his capital a/c with difference amount |
Usha get extra so we have to debit his capital a/c with difference amount
|
||
*2 Calculation of Actual Amount of Interest on Mita’s & Usha’s Capital
Interest on Capital = Opening Capital X Rate of Interest
| Interest on Mita’s Capital | = | 1,40,000 | X | 6 |
| 100 |
Interest on Mita’s Capital = 8,400/-
| Interest on Usha’s Capital | = | 1,20,000 | X | 6 |
| 100 |
Interest on Usha’s Capital = 7,200/-
*3 Calculation of Interest on Mita’s & Usha’s Drawing
| Interest on Drawing | = | Drawing X Rate of Interest X Period |
| Period | = | Date of withdrawal to End of Financial Year |
| = | 01/01/2016 to 31/03/2016 | |
| = | 3 Months |
| Interest on Mita’s Drawing | = | 32,000 | X | 6 | X | 3 |
| 100 | 12 |
Interest on Mita’s Drawing = 480/-
| Interest on Usha’s Drawing | = | 24,000 | X | 6 | X | 3 |
| 100 | 12 |
Interest on Usha’s Drawing = 360/-
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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
