Kumar and Raja were partners in a firm sharing profits in the ratio of 7 3. Their fixed capitals were Kumar Rs 9,00,000 and Raja Rs 4,00,000. The partnership deed provided for the following but the profit for the year was distributed without providing for (i) Interest on capital @ 9+ per annum. (ii) Kumar’s salary Rs 50,000 per year and Raja’s salary Rs 3,000 per month. The profit for the year ended 31.3.2007 was Rs 2,78,000. Pass the adjustment entry.
Dear Student
Note: Since in the question fixed capital are given all the adjustment shall be made in the current account of the partners.
Regards
| Journal | ||||
| Date | Particulars | Debit | Credit | |
| Kumar's Current A/c | Dr. | 11,100 | ||
| To Raja's Current A/c | 11,100 | |||
| (Being adjustment made) | ||||
| Statement of Working | |||
| Particulars | Kumar | Raja | Total |
| The amount that are missed and that should have been credited or (Debited) as : | |||
| Interest on Capital @ 9% P.A | 81,000 | 36,000 | 117,000 |
| Salary | 50,000 | 36,000 | 86,000 |
| Total | 131,000 | 72,000 | 203,000 |
| Total calculated above which is already credited as profit in PSR | |||
| 2,03,000 credited in the ratio of 7:3 | 142,100 | 60,900 | 203,000 |
| Total | 142,100 | 60,900 | 203,000 |
| Difference : to be credited or (debited) for making adjustments | (11,100) | 11,100 | - |
| Debit | Credit | ||
Note: Since in the question fixed capital are given all the adjustment shall be made in the current account of the partners.
Regards