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Q.75  The capital Accounts of A and B stood at Rs 400000 and Rs 300000 respectively after necessary 
adjustments in respect of the drawings and the net profit for the year ended 31st March, 2018. It was 
subsequently discovered that 5% p.a. interest on capital and also drawings were not taken into account 
in arriving at the distributable profit. The drawings of the partners had been: A- Rs 12,000 drawn at the 
end of each quarter and B- Rs 18,000 drawn at the end of each half year. 

The profit for the year as adjusted amounted to Rs 200000. The partners share profits in the ratio of 3 : 2. 
You are required to pass Journal entries and show adjusted Capital Accounts of the partners. 

[Hints: (i) For Interest on Capital: Dr. Profit and Loss Adjustment A/c: 29,200; 
                                                       Cr. A's Capital A,/c: 16,400 and B's Capital A/c: 12,800. 
(ii) For Interest on Drawings: Dr. A's Capital A/c: 900 and B's Capital A/c 450; 
                                                Cr. Profit and Loss Adjustment A/c: 1,350. 
(iii) Loss On Adjustment: Dr. A's Capital A/c: 16,710; and B's Capital A/c: 11,140; 
                                          Cr. Profit and Loss Adjustment A/c: 27,850]