Question

Suresh and Ramesh were partners in a firm sharing profits in the ratio of 3 : 2. Their fixed capitals were: Suresh ₹ 9,00,000 and Ramesh ₹ 6,00,000. The partnership deed provided for the following:

1. Interest on capital @ 5% per annum.
2. ₹ 60,000 per annum salary to Suresh and salary ₹ 2,000 per month to Ramesh. The profit earned by the firm for the year ending 31-3-2024 was ₹ 2,34,000.

The profits were divided equally without providing for the above.

Pass the adjustment entry.

Answer 1

Adjustments Table
Particulars	Suresh	Ramesh	Total
Interest on Capitals (Cr.)	45,000	30,000	75,000
Salary (Cr.)	60,000	24,000	84,000
Remaining Profit = 2,34,000 – 75,000 – 84,000 = 75,000 divided in 3 : 2 (Cr.)	45,000	30,000	75,000
Net amount which should have been credited (Cr.)	1,50,000	84,000	2,34,000
Less: Profit already distributed equally (Dr.)	1,17,000	1,17,000	2,34,000
	33,000 (Cr.)	33,000 (Dr.)

 

Journal Entry
Date	Particulars	L. F.	Debit (₹)	Credit (₹)
2024
March 31	Ramesh’s Current A/c    ...Dr.		33,000	-
	To Suresh’s Current A/c		-	33,000
	(Adjustment entry passed for salary, interest on capital, and wrong distribution of profit.)