20. Praveen, Sahil and Riya are partners having fixed capiytals of Rs 2,00,000, Rs 1,60,000 and Rs 1,20,000 respectively. They share profits in the ratio of 3:1:1. The Partnership Deed provided for the following which were not recorded in the books:
(i) Interest on Capital @ 5% p.a.
(ii) Salary to Praveen Rs 1,500 p.m. and to Riya Rs 1,000 p.m.
(iii) Transfer of profit to General Reserve Rs 10,000. Net Profit for the year ended 31st March, 2015 was Rs 1,00,000.
Pass necessary rectifying entry for the above adjustments in the books of the firm. Also show your working clearly.
Dear Student
Regards
| Journal | ||||
| Date | Particulars | Debit | Credit | |
| Pravin's Capital A/c | Dr. | 10,400 | ||
| Sahil's Capital A/c | Dr. | 4,800 | ||
| To General Reserve | 10,000 | |||
| To Riya's Capital A/c | 5,200 | |||
| (Being Adjustment made) | ||||
| Statement of Working | ||||
| Particulars | Pravin | Sahil | Riya | Total |
| Amount thet should have been credited | ||||
| Interest on Capital | 10,000 | 8,000 | 6,000 | 24,000 |
| Commission | - | - | - | - |
| Salary | 18,000 | 12000 | 30,000 | |
| Profit Share | 21,600 | 7,200 | 7,200 | 36,000 |
| General Reserve | - | - | - | 10,000 |
| Total | 49,600 | 15,200 | 25,200 | 100,000 |
| Amounts already credited | ||||
| As Profit in Ratio 3:1:1 | 60,000 | 20,000 | 20,000 | 100,000 |
| Total | 60,000 | 20,000 | 20,000 | 100,000 |
| Difference : to be credited or (debited) | (10,400) | (4,800) | 5,200 | - |
| Debit | Debit | Credit | ||
| Actual Appropriation | ||
| Net profit before any appropriation | 100,000 | |
| Less : Interest on Capital @ 5% | ||
| Pravin | 10,000 | |
| Sahil | 8,000 | |
| Riya | 6,000 | |
| Profit after Interest | 76,000 | |
| Less : Commission | ||
| Pravin | - | |
| Sahil | - | |
| Riya | - | |
| Profit after commission | 76,000 | |
| Less : Salary | ||
| Pravin | 18,000 | |
| Sahil | ||
| Riya | 12,000 | |
| Profit after Salary | 46,000 | |
| Less : Transfer to General Reserve | 10,000 | |
| Profit for actual distribution | 36,000 | |
| Distribution in Ratio 3:1:1 | ||
| Pravin | 21,600 | |
| Sahil | 7,200 | |
| Riya | 7,200 | |
Regards