The partners of a firm, Alia, Bhanu and Chand distributed the profits for the year ended 31st March, 2017, ₹ 80,000 in the ratio of 3:3:2 without providing for the following adjustments:
a) Alia and Chand were entitled to a salary of ₹ 1,500 each p.m.
b) Bhanu was entitled for a salary of ₹ 4,000 p.a.
Pass the necessary Journal entry for the above adjustments in the books of the firm. Show workings clearly
Dear student
JOURNAL
WORKING NOTE:
ADJUSTMENT TABLE
ADJUSTMENT ENTRY:
Alia capital A/C DR 13,500
Chand capital A/C DR 3,000
To bhanu capital A/C 16,500
Regards
JOURNAL
| S.NO | PARTICULARS | L.F | DEBIT | CREDIT |
| 1. | Alia capital A/C DR Bhanu capital A/C DR Chand capital A/C DR To Profit and loss adjustment A/C (Being share of profit wrongly credited to partner capital A/C) |
30,000 30,000 20,000 |
80,000 |
|
| 2. | Profit and aloss adjustment A/C DR To alia capital A/C To bhanu capital A/C To chand capital A/C (Being salary credited to partners capital A/C) |
84,000 |
18,000 48,000 18,000 |
|
| 3. | alia capital A/C DR Bhanu capital A/C DR Chand capital A/C DR To profit and loss adjustment A/C (Being loss on adjustment transferred to capital A/C) |
1,500 1,500 1,000 |
4,000 |
ADJUSTMENT TABLE
| PARTICULARS | ALIA | BHANU | CHAND | FIRM | ||
| amount to be debited: wrong profit without adjustments: |
(30,000) | (30,000) | (20,000) | (80,000) | ||
| Amount to be credited: salary to partners |
18,000 | 48,000 | 18,000 | 84,000 | ||
| Amount to be debited in capital A/C loss incurred after adjustments |
(1,500) | 1,500) | (1,000) | (4,000) | ||
| 13,500 (debit) |
16,500 (credit) |
3,000 (debit) |
Alia capital A/C DR 13,500
Chand capital A/C DR 3,000
To bhanu capital A/C 16,500
Regards