# Question 65 Chapter 2 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 65 Chapter 2 of +2-A

65. Piya and Bina are partners in firm sharing profits and losses in the ratio of 3 : 2. Following

 Liabilities Assets Capitals: Sundry Assets 1,20,000 Piya 80,000 Bina 40,000 1,20,000 1,20,000 1,20,000

The profits 30,000 for the year ended 31st March 2016 were divided between the partners without allowing interest on capital @ 12% p.a. salary to Piya @ 1,000 per month. During the year Piya withdrew 8,000 and Bina withdrew 4,000. Showing your working notes clearly, pass the necessary rectifying entry.

The solution of Question 65 Chapter 2 of +2-A

:

 Date Particulars L.F. Debit Credit Bina’s Capital A/c Dr 5,856 To Piya’s Capital A/c 5,856 (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 Capital at the end 80,000 40,000 Less: Profit alreadyDistributed (1:1:1) 18,000 12,000 Add: Drawings During the year 8,000 4,000 Capital at the beginning 70,000 32,000

 Statement Showing Adjustment of Profit required Particulars Piya Bina Total Actual Amount of Interest on Capital @12% p.a. 8,400 3,840 12,240 Add: – Salary 1000 X 12months 12,000 – 12,000 Actual Amount to be credited 20,400 3,840 24,240 Less: wrongly Amount credited in Profit sharing ratio i.e. 3:2 14,544 9,696 24,240 5,856 – 5,856 – Piya get less amount, so we have to credit his capital a/c with difference amount Bina get extra so we have to debit his capital a/c with difference amount

Calculation of Actual Amount of Interest on Piya’s & Bina’s Capital
Interest on Capital = Opening Capital X Rate of Interest

 Interest on Piya’s Capital = 70,000 X 12 100

Interest on Piya’s Capital = 8,400/-

 Interest on Bina’s Capital = 32,000 X 12 100

Interest on Bina’s Capital = 3,840/-

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. 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