Mannu and Shristhi are partners in a firm sharing profit in the ratio of 3 : 2. Following is the balance sheet of the firm as on March 31, 2013.

 

 

Amount

 

 

Amount

Liabilities

Rs

Assets

Rs

Mannu’s Capital

30,000

 

Drawings :

 

 

Shristhi’s Capital

10,000

40,000

Mannu

4,000

 

 

 

 

Shristhi

2,000

6,000

 

 

 

Other Assets

34,000

 

 

40,000

 

 

40,000

 

 

 

 

 

 

 

Profit for the year ended March 31, 2013 was Rs 5,000 which was divided in the agreed ratio, but interest @ 5% p.a. on capital and @ 6% p.a. on drawings was inadvertently enquired. Adjust interest on drawings on an average basis for 6 months. Give the adjustment entry.

 

Adjustment of Profit

 

 

Mannu’s

Shrishti

 

Total

Interest on Capital

1,500

500

=

2,000

Less: Interest on Drawings

(120)

(60)

=

(180)

Right distribution of Rs 1,820

1,380

440

=

1,820

Less: Wrong distribution of Rs 1,820 (3 : 2)

(1,092)

(728)

=

(1,820)

Adjusted Profit

288

(288)

=

NIL

 

Adjusting Journal Entry

 

Date

 

Particulars

 

L.F

Debit Amount 

Rs

Credit Amount 

Rs

 

Shrishti's Capital A/c

Dr.

 

288

 

 

To Mannu's Capital A/c

 

 

 

288

 

(Adjustment of profit made)

 

 

 

 

 

 

 

 

 

 

 

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