Question 68 Chapter 2 of Class 12 Part - 1 VK Publication

Question 68 Chapter 2 of Class 12 Part – 1

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The solution of Question 68 Chapter 2 of Class 12 Part – 1: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

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

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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 )