- On 1st April 2015 the Capitals of A and B were ₹4,00,000 and ₹2,00,000 respectively. They divided profits in the capital ratio. Profits for the year ended 31st March 2016 were ₹3,00,000 which have been duly distributed among the partners but the following transactions were not passed through the books:
- Interest On Capitals @12% p.a.
- Interest on drawings A: ₹12,000 and B ₹10,000.
- Commission due to B on a special transaction ₹20,000
- A is to be paid a salary of ₹50,000.
You are required to pass a single journal entry to rectify the above error.
Dear Student,
Working Notes:
Regards
| Journal | |||||
| Date | Particulars | L.F. | Debit Amount (Rs) |
Credit Amount (Rs) |
|
| B’s Capital A/c | Dr. | 6,000 | |||
| To A’s Capital A/c | 6,000 | ||||
| (Adjustment entry made) | |||||
Working Notes:
| Profit and Loss Appropriation Account for the year ended … |
||||||
| Dr. | Cr. | |||||
| Particulars | Amount Rs |
Particulars | Amount Rs |
|||
| Interest on Capital | Profit and Loss A/c | 3,00,000 | ||||
| A | 48,000 | Interest on Drawings | ||||
| B | 24,000 | 72,000 | A | 12,000 | ||
| Commission to B | 20,000 | B 10,000 | 22,000 | |||
| Salary to A | 50,000 | |||||
| Profit transferred to: | ||||||
| A’s Capital A/c | 1,20,000 | |||||
| B’s Capital A/c | 60,000 | 1,80,000 | ||||
| 3,22,000 | 3,22,000 | |||||
| Particulars | A | B | Total |
| Interest on Capital | 48,000 | 24,000 | 72,000 |
| Salary | 50,000 | 50,000 | |
| Commission | 20,000 | 20,000 | |
| Less: Interest on Drawings | 12,000 | 10,000 | 22,000 |
| Profit | 1,20,000 | 60,000 | 1,80,000 |
| Amount should be Credited | 2,06,000 | 94,000 | 3,00,000 |
| Profit credited(3,00,000, 2:1) | 2,00,000 | 1,00,000 | 3,00,000 |
| Net Effect | 6,000(Cr) | 6,000(Dr) | NIL |
Regards