Question 64 Chapter 2 of +2-A
64. Anil, Vijay and Anil are partners, the balances of their Capital Accounts being 30,000, 25,000
and 20,000 respectively. In arriving at these amounts profit for the year ended 31st
March 2019, 24,000 had already been credited to partners in the proportion in which they shared profits. Their drawings were 5,000 Anil, 4,000 Vijay and 3,000 Anil during the
year. Subsequently, the following omissions were noticed and it was decided to rectify the errors:
- Interest on capital @ 10% p.a.
- Interest on drawings: Anil 250, Vijay 200 and Anil 150.
Make necessary corrections through a Journal entry and show your workings clearly.
The solution of Question 64 Chapter 2 of +2-A:
| Date | Particulars |
L.F. | Debit | Credit | |
| Anil’s Capital A/c | Dr | 550 | |||
| To Mohan’s Capital A/c | 550 | ||||
| (Being adjustment of Interest on partners′ capital made) | |||||
Working Note: –
| Statement Showing Adjustment of Profit required |
|||
| Particulars | Amount of Mohan’s Capital |
Amount of Vijay’s Capital |
Amount of Anil’s Capital |
| Capital at the end | 30,000 | 25,000 | 20,000 |
| Less: Profit already Distributed (1:1:1) |
8,000 | 8,000 | 8,000 |
| Add: Drawings During the year | 5,000 | 4,000 | 3,000 |
| Capital at the beginning | 27,000 | 21,000 | 15,000 |
| Statement Showing Adjustment of Profit required |
||||
| Particulars | Mohan |
Vijay |
Anil |
Total |
| Actual Amount of Interest on Capital @10% p.a. | 2,700 | 2,100 | 2,500 | 7,300 |
| Less: Amount of Interest on Drawing | 250 | 200 | 150 | 600 |
| Actual Amount to be credited | 2,450 | 1,900 | 1,350 | 5,700 |
| Less: wrongly Amount credited in Profit sharing ratio i.e. 1:1:1 | 1,900 | 1,900 | 1,900 | 6,000 |
| 550 | – 550 | – | ||
|
Mohan get less amount, so we have to credit his capital a/c with difference amount |
|
Anil get extra so we have to debit his capital a/c with difference amount
|
||
Calculation of Actual Amount of Interest on Mohan’s, Vijay’s, & Anil’s Capital
Interest on Capital = Opening Capital X Rate of Interest
| Interest on Mohan’s Capital | = | 27,000 | X | 10 |
| 100 |
Interest on Mohan’s Capital = 2,700/-
| Interest on Vijay’s Capital | = | 21,000 | X | 10 |
| 100 |
Interest on Vijay’s Capital = 2,100/-
| Interest on Anil’s Capital | = | 15,000 | X | 10 |
| 100 |
Interest on Anil’s Capital = 1,500 /-
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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