Question 67 Chapter 2 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 67 Chapter 2 of +2-A

Question 67 Chapter 2 of +2-A

67. On 31st March 2019, after the closing of the accounts, the Capital Accounts of P, Q and R stood in the books of the firm at 40,000; 30,000 and 20,000 respectively. Subsequently, it was noticed that interest on capital @ 5% had been omitted. Profit for the year ended 31st March 2019 was 60,000 and the partners’ drawings had been P – 10,000, Q – 7,500 and R– 4,500. Profit-sharing ratio of P, Q and R is 3 : 2 : 1. Give necessary adjustment entry.

 

The solution of Question 67 Chapter 2 of +2-A

:

Date Particulars
L.F. Debit Credit
  P’s Capital A/c Dr   300  
  To Q’s Capital A/c       8
  To R’s Capital A/c       292
  (Being adjustment made)        

 


Working Note: –

 

Calculation of Opening Capital of Partners’
 
Particulars

Amount of P’s Capital

Amount of Q’s Capital

Amount of R’s Capital
Capital at the end 40,000 30,000 20,000
Less: Profit already
Distributed (1:1:1)
30,000 20,000 10,000
Add: Drawings During the year 10,000 7,500 4,500
Capital at the beginning 20,000 17,500 14,500

 

Statement Showing Adjustment of Profit required
Particulars P

Q

R

Total
Actual Amount of Interest on Capital @10% p.a. 1,000 875 725 2,600
Less: wrongly Amount credited in Profit sharing ratio i.e. 3:2:1 1,300 867 433 2,600
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
  433 8 292
 

P get extra so we have to debit his capital a/c with difference amount

Q get less amount, so we have to credit his capital a/c with difference amount

 

R get less amount, so we have to credit his capital a/c with difference amount

 

Calculation of Actual Amount of Interest on P’s, Q’s, & R’s Capital
Interest on Capital = Opening Capital X Rate of Interest



Interest on P’s Capital 20,000 X 5
100

Interest on P’s Capital = 1,000/-

Interest on Q’s Capital 17,500 X 5
100

Interest on Q’s Capital = 875/-

Interest on R’s Capital 14,500 X 5
100

Interest on R’s Capital = 725/-

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)

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

2 Book 1 min - Question 67 Chapter 2 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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