Q.The capital accounts of Asif and Benny stood at Rs. 30,000 and Rs. 40,000 respectively after the necessary adjustments in respect of drawings and net profit for the year ended 31st March ,2016. It was subsequently ascertained that interest on capital @ 10% per annum and interest on drawings @ 5% per annum were not taken into account in arriving at the divisible profits for the year .
The drawings of the partners had been : Asif Rs. 1,200 drawn at the end half year and Benny Rs. 1,200 drawn at end of each quarter .
The net profit for the year amounted to Rs. 20,000 . The partners share profits and losses in the ratio of 3:2
You are required to :
(i) Pass the necessary journal entires to rectify the lapse in accounting .
(ii) Prepare the adjusted capital accounts of the partners.
| Journal | ||||
| Particulars | L.F. | Debit Rs |
Credit Rs |
|
| Asif’ s Capital A/c | Dr. | 1,350 | ||
| To Benny’s Capital A/c | 1,350 | |||
| (Adjustment entry made) | ||||
| Particulars | Asif | Benny | Total |
| Interest on capital | 2,040 | 3,680 | 5,720 |
| Interest on drawings | 30 | 90 | 120 |
| Amount should be credited | 2,010 | 3,590 | 5,600 |
| Amount credited ( Rs.5,600 in 3:2) | 3,360 | 2,240 | 5,600 |
| Net Effect | 1,350(Dr) | 1,350(Cr) | NIL |
Note:
Calculation of opening capital
| Asif | Benny | |
| Closing Capital | 30,000 | 40,000 |
| Add: Drawings | 2,400 | 4,800 |
| 32,400 | 44,800 | |
| Less: Profit | 12,000 | 8,000 |
| Opening Capital | 20,400 | 36,800 |
| Particulars | Asif | Benny | Particulars | Asif | Benny |
| Benny’s Capital A/c | 1,350 | Balance b/d | 30,000 | 40,000 | |
| Balance c/d | 28,650 | 41,350 | Asif’s Capital A/c | 1,350 | |
| 30,000 | 41,350 | 30,000 | 41,350 | ||
Regards