Question 71 Chapter 2 of +2-A - T.S. Grewal 12 Class Part

Question 71 Chapter 2 of +2-A

Table of Contents

71. A B and C are partners in a firm. Net profit of the firm for the year ended 31st March 2019 is
30,000, which has been duly distributed among the partners, in their agreed ratio of 3: 1: 1.
It is noticed on 10th April 2019 that the undermentioned transactions were not passed through the books of account of the firm for the year ended 31st March 2019.
Interest on Capital @ 6% per annum, the capital of A, B and C being 50,000; 40,000 and 30,000 respectively.
Interest on drawings: A 350; B 250; C 150.
Partners’ Salaries: A 5,000; B 7,500.
Commission due to A for some special transaction 3,000.
You are required to pass a Journal entry, which will not affect Profit and Loss Account of the firm and rectify the position of partners’ interest.

The solution of Question 71 Chapter 2 of +2-A:

Working Note: –

Statement Showing Adjustment of Profit required
Particulars	A	B	C	Total
Actual Amount of Interest on Capital @6% p.a. *2	3,000	2,400	1,800	7,200
Add: – Salary	5,000	7,500	–	12,500
Add: – Commission	3,000	–	–	3,000
Less: – Interest on Drawing	– 350	– 250	– 150	– 750
Actual Amount to be credited	10,650	9,650	1,650	21,950
Less: wrongly Amount credited in Profit sharing ratio i.e. 3:1:1	13,170	4,390	4,390	21,950
	– 3,675	3,550	125	–
	A get extra so we have to debit his capital a/c with difference amount	B get less amount, so we have to credit his capital a/c with difference amount	C get extra so we have to debit his capital a/c with difference amount

*2 Calculation of Actual Amount of Interest on A’s, B’s, & C’s Capital
Interest on Capital = Opening Capital X Rate of Interest

Interest on A’s Capital	=	50,000	X	6
				100

Interest on A’s Capital = 3,000/-

Interest on B’s Capital	=	40,000	X	6
				100

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Interest on B’s Capital = 2,400/-

Interest on C’s Capital	=	30,000	X	6
				100

Interest on C’s Capital = 1,800/-

Also, Check out the solved question of previous Chapters: –

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