Question 68 Chapter 2 of Class 12 Part – 1
68. M and N are partners in a firm sharing profits in the ratio 3:2 Following is their Balance Sheet as on 31st March, 2018:
Balance sheet
| Liabilities | Rs. | Assets | Rs. | ||
| Capital A/c’s: M | 50,000 | Drawings : M | 10,000 | ||
| N | 50,000 | 1,00,000 | N | 10,000 | 20,000 |
| Sundry creditors | 20,000 | Sundry Assets | 1,00,000 | ||
| 1,20,000 | 1,20,000 |
Profit for the year amounted to Rs. 25,000 which was distributed regardless of crediting interest on capital at 5% pa. and debiting interest on drawings at 6% pa. Interest on drawings may be calculated on an average basis for six months.
Pass necessary adjusting entry.
The solution of Question 68 Chapter 2 of Class 12 Part – 1: –
Table Adjustment
| Particulars |
M Rs. |
N Rs. |
| Closing Capitals | 50,000 | 50,000 |
| Less: Share of Profit (already added to the capitals) | 15,000 | 10,000 |
| Opening capitals | 35,000 | 40,000 |
| Interest on Opening Capitals @5% | 1,750 | 2,000 |
Interest on Drawings for six months @6% p.a.
M = 10,000 ×6/100×6/12= Rs. 300
N = 10,000 ×6/100×6/12= Rs. 300
Table Adjustment
| Particulars |
M Rs. |
N Rs. | Total ₹ |
| Interest on Capital A/c | 1,750 | 2,000 | 3,750 |
| Less: Interest on Drawings | 300 | 300 | 600 |
| (Cr.) (A) | 1,450 | 1,700 | 3,150 |
| Less: Net loss of the firm ( Rs. 3,150 in the ratio of 3:2) (Dr.) (B) | 1,890 | 1,260 | 3,150 |
| Net Effect (A-B) | ( Dr.) 440 | (Cr.) 440 | NIL |
Adjustment Journal Entry
| Date | Particular | L . F |
Dr. ₹ | Cr. ₹ | |
| M’s Capital A/c | Dr. | 440 | |||
| To N’s Capital A/c | 440 | ||||
| (Being partners’ capital account adjusted for interest on capital and drawings ) |
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Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution
Chapter No. 1 – Accounting Not for Profit Organisations
Chapter No. 2 – Partnership Accounts – I (Introduction)
Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
Chapter No. 8 – Company Accounts (Share Capital)
Chapter No. 9 – Company Accounts (Issue of Debentures)
Chapter No. 10 – Company Accounts (Redemption of Debentures)
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution
Chapter No. 1 – Financial Statements of a Company
Chapter No. 2 – Financial Statement Analysis
Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
Chapter No. 4 – Ratio Analysis
Chapter No. 5 – Cash Flow Statement
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