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
 
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

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