Question

Das, Roy and Sen are partners in a firm. The profit of the firm, for the year ended 31^st March, 2025, was ₹ 1,20,000 which was equally distributed among them, without providing for the following provisions of the partnership deed:

1. Roy had guaranteed that the firm would earn a profit of at least ₹ 1,35,000. Any shortfall in these profits would be personally compensated by him.
2. Profits to be shared in the ratio of 2 : 2 : 1.
3. Sen is guaranteed by the firm that his share of profits, in any given year, would be a minimum of ₹ 30,000.

You are required to pass the necessary journal entries to rectify the error in accounting on 1^st April 2025.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2025
April 1	Das’s Capital A/c   ...Dr.		40,000	-
	Roy’s Capital A/c   ...Dr.		40,000	-
	Sen’s Capital A/c   ...Dr.		40,000	-
	To P/L Adjustment A/c		-	1,20,000
	(Being share of profit distributed reversed)
April 1	Roy’s Capital A/c   ...Dr.		15,000	-
	To P/L Adjustment A/c		-	15,000
	(Being Roy’s guarantee to the firm fulfilled)
April 1	P/L Adjustment A/c   ...Dr.		1,35,000	-
	To Das’s Capital A/c		-	54,000
	To Roy’s Capital A/c		-	54,000
	To Sen’s Capital A/c		-	27,000
	(Being profit distributed in the profit-sharing ratio)
April 1	Das’s Capital A/c   ...Dr.		1,500	-
	Roy’s Capital A/c   ...Dr.		1,500	-
	To Sen’s Capital A/c		-	3,000
	(Being the guarantee of minimum profit to Sen given by the firm, fulfilled by Das and Roy in their profit-sharing ratio)