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

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 alreadyDistributed (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: –

The Content covered in this article:

### 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