Mannu and Shristhi are partners in a firm sharing profit in the ratio of 3 : 2. Following is the balance sheet of the firm as on March 31, 2013.
Amount
Amount
Liabilities
Rs
Assets
Rs
Mannu’s Capital
30,000
Drawings :
Shristhi’s Capital
10,000
40,000
Mannu
4,000
Shristhi
2,000
6,000
Other Assets
34,000
40,000
40,000
Profit for the year ended March 31, 2013 was Rs 5,000 which was divided in the agreed ratio, but interest @ 5% p.a. on capital and @ 6% p.a. on drawings was inadvertently enquired. Adjust interest on drawings on an average basis for 6 months. Give the adjustment entry.
Mannu and Shristhi are partners in a firm sharing profit in the ratio of 3 : 2. Following is the balance sheet of the firm as on March 31, 2013.
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| Amount |
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| Amount | ||
| Liabilities | Rs | Assets | Rs | ||||
| Mannu’s Capital | 30,000 |
| Drawings : |
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| Shristhi’s Capital | 10,000 | 40,000 | Mannu | 4,000 |
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| Shristhi | 2,000 | 6,000 | ||
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| Other Assets | 34,000 | |||
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| 40,000 |
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| 40,000 | ||
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Profit for the year ended March 31, 2013 was Rs 5,000 which was divided in the agreed ratio, but interest @ 5% p.a. on capital and @ 6% p.a. on drawings was inadvertently enquired. Adjust interest on drawings on an average basis for 6 months. Give the adjustment entry.
Adjustment of Profit
| Mannu’s | Shrishti |
| Total |
Interest on Capital | 1,500 | 500 | = | 2,000 |
Less: Interest on Drawings | (120) | (60) | = | (180) |
Right distribution of Rs 1,820 | 1,380 | 440 | = | 1,820 |
Less: Wrong distribution of Rs 1,820 (3 : 2) | (1,092) | (728) | = | (1,820) |
Adjusted Profit | 288 | (288) | = | NIL |
Adjusting Journal Entry
Date |
Particulars
| L.F | Debit Amount Rs | Credit Amount Rs | |
| Shrishti's Capital A/c | Dr. |
| 288 |
|
| To Mannu's Capital A/c |
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| 288 |
| (Adjustment of profit made) |
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