English
CBSECommerce (English Medium) Class 12
Question Papers2580
Textbook Solutions20345
MCQ Online Mock Tests42
Important Solutions22654
Concept Notes & Videos608
Time Tables24
Syllabus

Distribution of Profit Among Partners - Past Adjustments

Advertisements

Topics

  • Introduction
  • Alternate Method
  • Example
CBSE: Class 12
CISCE: Class 12

Format: Past Adjustments

                                                     Adjustment Table

Particulars X (₹) Y (₹) Z (₹) Total (₹)
A. Amount already recorded (e.g.):        
Interest on Capital ... ... ... ...
Salary to Partner ... ... ... ...
Share of Profit (...) (...) (...) (...)
Interest on Drawings ... ... ... ...
         
B. Amount which should have been recorded (e.g.):        
Interest on Capital ... ... ... ...
Salary to Partner ... ... ... ...
Share of Revised Profit (...) (...) (...) (...)
Interest on Drawings ... ... ... ...
         
C. Difference (A − B) ... ... ... ...
CBSE: Class 12
CISCE: Class 12

Journal Entries: Past Adjustments

A. Adjustment Entry for Withdrawal of Profit (Old Profit Distribution):

Partners' Capital/Current A/cs             ...Dr.

          To Profit & Loss Adjustment A/c

B. Adjustment Entry for Items to be Credited to Partners’ Capital/Current A/cs:

1. For Interest on Capital not allowed or short allowed:

Interest on Capital A/c                        ...Dr.

        To Partner's Capital/Current A/c

2. For Partners' Remuneration (Salary) not allowed or short allowed:

Partner's Salary A/c                           ...Dr.

        To Partner's Capital/Current A/c

3. For Interest on Drawings excess charged:

Interest on Drawings A/c                  ...Dr.

      To Partner's Capital/Current A/c

C. Adjustment Entry for Items to be Debited to Partners’ Capital/Current A/cs:

1. For Interest on Capital excess allowed:

Partners’ Capital/Current A/c           ....Dr.

     To Interest on Capital A/c

2. For Partner’s Remuneration (Salary) excess allowed:

Partners’ Capital/Current A/c           ...Dr.

     To Partner’s Salary A/c

3. For Interest on Drawings less charged or not charged:

Partners’ Capital/Current A/c          ...Dr.

       To Interest on Drawings A/c

D. Transfer to Profit & Loss Adjustment A/c:

1. When amounts are to be debited to Profit & Loss Adjustment A/c:

Profit & Loss Adjustment A/c        ...Dr.

     To Interest on Capital A/c 

     To Partner’s Remuneration (Salary) A/c

     To Interest on Drawings A/c

2. When amounts are to be credited to Profit & Loss Adjustment A/c:

Interest on Capital A/c                   ...Dr.

Partner’s Salary A/c                       ...Dr.

Interest on Drawings A/c               ...Dr.

      To Profit & Loss Adjustment A/c

E. Final Balance Transfer from Profit & Loss Adjustment A/c:

1. If there is Profit:

Profit & Loss Adjustment A/c     ...Dr.

        To Partners’ Capital/Current A/cs

2. If there is a Loss:

Partners’ Capital/Current A/cs    ...Dr.

      To Profit & Loss Adjustment A/c

Shaalaa.com | Past Adjustment

Shaalaa.com


Next video


Shaalaa.com


Past Adjustment [00:27:22]
S
Series: 1
0%


Past Adjustment
00:27:22  undefined

Related QuestionsVIEW ALL [18]

Green and Orange are partners. Green draws a fixed amount at the beginning of every month. Interest on drawings is charged @8% p.a. At the end of the year interest on Green's drawings amounts to ₹ 2,600. Monthly drawings of Green were ______.

Arun, Boby and Chintu are partners in a firm sharing profit in the ratio or 2:2:1. According to the terms of the partnership agreement, Chintu has to get a minimum of Rs 60,000, irrespective of the profits of the firm. Any Deficiency to Chintu on Account of such guarantee shall be borne by Arun. Prepare the profit and loss appropriation account showing distribution of profits among partners in case the profits for year 2015 are: (i) Rs 2,50,000; (ii) 3,60,000.

Illustrate how interest on drawings will be calculated under various situations.

If a fixed amount is withdrawn on the first day of every quarter, for what period the interest on total amount withdrawn will be calculated?

P, Q and R were partners with fixed capital of ₹ 40,000, ₹ 32,000 and ₹ 24,000. After distributing the profit of ₹ 48,000 for the year ended 31st March 2022 in their agreed ratio of 3:1:1 it was observed that:

  1. Interest on capital was provided at 10% p.a. instead of 8% p.a.
  2. Salary of ₹ 12,000 was credited to P instead of Q.

You are required to pass a single journal entry in the beginning of the next year to rectify the above omissions.

Anju, Manju and Mamta are partners whose fixed capitals were Rs 10,000, Rs 8,000 and Rs 6,000, respectively. As per the partnership agreement, there is a provision for allowing interest on capitals @ 5% p.a. but entries for the same have not been made for the last three years. The profit sharing ratio during there years remained as follows:

Year

Anju

Manju

Mamta

2016

4

3

5

2017

3

2

1

2018

1

1

1

Make necessary and adjustment entry at the beginning of the fourth year i.e. April 2017.

The firm of Harry, Porter and Ali, who have been sharing profits in the ratio of 2 : 2 : 1, have existed for same years. Ali wants that he should get equal share in the profits with Harry and Porter and he further wishes that the change in the profit sharing ratio should come into effect retrospectively were for the last three year. Harry and Porter have agreement on this account. The profits for the last three years were:

 

Rs

2014-15

22,000

2015-16

24,000

2016-17

29,000

Show adjustment of profits by means of a single adjustment journal entry. 

On March 31, 2017 the balance in the capital accounts of Eluin, Monu and Ahmed, after making adjustments for profits, drawing, etc; were Rs 80,000, Rs 60,000 and Rs 40,000 respectively. Subsequently, it was discovered that interest on capital and interest on drawings had been omitted. The partners were entitled to interest on capital @ 5% p.a. The drawings during the year were Eluin Rs 20,000; Monu, Rs 15,000 and Ahmed, Rs 9,000. Interest on drawings chargeable to partners were Eluin Rs 500, Monu Rs 360 and Ahmed Rs 200. The net profit during the year amounted to Rs 1,20,000. The profit sharing ratio was 3 : 2 : 1. Pass necessary adjustment entries.

Related concepts

Advertisements
Share
Notifications

Englishहिंदीमराठी
Login
Create free account


      Forgot password?
Course
Use app×