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Q180. Ajay, Binay & Chetan were partners sharing profits in the ratio 3:3:2. The Partnership Deed provided for the following:
(i) Salary of Rs. 2000 per quarter to Ajay & Binay.
(ii) Chetan was entitled to a commission of Rs. 8000.
(iii) Binay was guaranteed a profit of Rs. 50,000 p.a.
The profit of the firm for the year ended 31st March, 2015 was Rs. 1,50,000 which was distributed among Ajay, Binay & Chetan in the ratio 2:2:1, without taking into consideration the provisions of Partnership Deed. Pass Necessary rectifying entry for the above adjustments in the books of the firm. Show your workings clearly.
[Ans. Dr. Ajay's Capital A/c- Rs. 6400; Binay's Capital A/c. Rs. 2000;  Cr. Chetan's Capital A/c. 8400].

Dear Student


Rectification entry
Ajay's Capital A/c Dr. 6,400  
Binay's Capital A/c Dr. 2,000  
  To Chetan's Capital A/c     8,400
(Being rectification made)      
 
Statement of Working of rectification
Particulars  Ajay    Binay   Chetan   Total 
Distribution as per Partnership deed :        
Salary                        8,000                        8,000                        16,000
Commission                            8,000                        8,000
Profit Distribution (Note)                      45,600                      50,000                      30,400                   126,000
Total Credits that should have been made                       53,600                      58,000                      38,400                   150,000
         
Actual Distribution         
Profit shared in (2:2:1)                      60,000                      60,000                      30,000 150000
         
Difference : As per deed - Actual                       (6,400)                      (2,000)                        8,400                               -  
   Debit   Debit   Credit   
 
Profit distribution
Total Profit                   150,000
Less : Salary of ajay and binay                      16,000
Less : Commission of Chetan                        8,000
Profit available for Distribution                   126,000
   
As per PSR  (3:3:8)  
Ajay                      47,250
Binay                      47,250
Chetan                      31,500
   
Profit share guaranteed to Binay to be transferred to his capital A/c                      50,000
Deficiency to be borne by Ajay and Chetan in 3:2(PSR)                        2,750
   
Deficiency share of Ajay                        1,650
Actual profit transferred to Ajay                      45,600
   
Deficiency share of Chetan                        1,100
Actual profit transferred to Chetan                      30,400


Regards

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