Shiv and Shanker were partners in a firm sharing profits in 3:2 ratio. Their fixed capitals were Rs.1,70,000 and Rs.2,10,000 respectively. The partnership deed provided for the following:
1. Interest in capital @ 12% p.a.
2. Interest on drawings @ 18% p.a.
Shiv withdrew Rs.12,000 on 30.6.2006 and Shankar withdrew Rs.18,000 on 30.9.2006. The profit for the firm for the year ended 31.3.2007 was Rs.97,000, which was distributed among the partners without providing for the above adjustments.
PASS ADJUSTMENT ENTRY.
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