# Question 73 Chapter 2 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 73 Chapter 2 of +2-A

73. Capitals of A, B and C as on 31st March, 2019 amounted to 90,000, 3,30,000 and 6,60,000
respectively. Profit of 1,80,000 for the year ended 31st March 2019 was distributed in the
ratio of 4: 1: 1 after allowing interest on Capital @ 10% p.a. During the year, each partner withdrew 3,60,000. The Partnership Deed was silent as to profit-sharing ratio but provided for
interest on capital @ 12%.
Pass the necessary adjustment entry showing the working clearly.

The solution of Question 73 Chapter 2 of +2-A

:

 Date Particulars L.F. Debit Credit A’s Capital A/c Dr 66,600 To B’s Capital A/c 30,000 To C’s Capital A/c 36,600 (Being adjustment made)

Working Note: –

 Statement Showing Adjustment of Profit required Particulars Amount of A’s Capital Amount of B’s Capital Amount of C’s Capital Capital at the end 90,000 3,30,000 6,60,000 Less: Profit alreadyDistributed (4:1:1) 1,20,000 30,000 30,000 Add: Drawings During the year 3,60,000 3,60,000 3,60,000 Capital at the beginning 3,30,000 6,60,000 9,90,000

 Statement Showing Adjustment of Profit required Particulars A B C Total Actual Amount of Interest on Capital @6% p.a. *2 39,600 79,200 1,18,800 2,37,600 Add: – Actual amount of Profit share to be credited 1:1:1 *3 46,800 46,800 46,800 1,40,400 Less: – wrongly credited amount of interest on capital *4 -33,000 -66,000 -99,000 -1,98,000 Less: – wrongly credited amount of share of profit 4:1:1 *5 -1,20,000 -30,000 – 30,000 -1,80,000 – 66,600 30,000 36,600 – 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 = 3,30,000 X 12 100

Interest on A’s Capital = 33,000/-

 Interest on B’s Capital = 6,60,000 X 12 100

Interest on B’s Capital = 66,000/-

 Interest on C’s Capital = 9,90,000 X 12 100

Interest on C’s Capital = 99,000/-

*3 Calculation of the Wrong 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 = 3,30,000 X 10 100

Interest on A’s Capital = 33,000/-

 Interest on B’s Capital = 6,60,000 X 10 100

Interest on B’s Capital = 66,000/-

 Interest on C’s Capital = 9,90,000 X 10 100

Interest on C’s Capital = 99,000/-

*4: -Actual distribution of the share of profit among the partners’

 Net Profit after Actual interest on capital = Net Profit + Wrong Int. on Cap. + actual Int. on Cap. = 1,80,000 + 1,98,000 – 2,37,600 = 1,40,400

Distribution of profit in Ratio 1: 1: 1 (because the deed is silent amount profit sharing ratio.)

 Profit share of A = 1,40,400 X 1/3 Profit share of A = 46,800/- Profit share of B = 1,40,400 X 1/3 Profit share of B = 46,800/- Profit share of C = 1,40,400 X 1/3 Profit share of C = 46,800/-

*5: -Wrong distribution of the share of profit among the partners’

Net Profit after interest & Salary = 1,80,000
Distribution of profit in Ratio 4 : 1: 1

 Profit share of A = 1,80,000 X 4/6 Profit share of A = 1,20,000/- Profit share of B = 1,80,000 X 1/6 Profit share of B = 30,000/- Profit share of C = 1,80,000 X 1/6 Profit share of C = 30,000/-

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)

• 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