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Question
Amar, Karan and Varun were partners in a firm manufacturing garment. They were sharing profits in the ratio of 5:3:2. On 1st April, 2012 their capitals were Rs 3,00,000, Rs 4,00,000 and Rs 5,00,000 respectively. After the flood in Uttaranchal, all partners decide to personally help the flood victims. For this Amar withdrew Rs 30,000 from the firm on 1st September 2012, Karan instead of withdrawing cash from the firm took garments amounting to Rs 36,000 from the firm and distributed to the flood victims. On the other hand, Varun withdrew Rs 1,50,000 from his capital on 1st January 2013 and started a school to provide elementary education in the flood affected area. The partnership deep provides for charging interest on drawings @ 6% p.a. After the Final Accounts were prepared, it was discovered that interest in drawings had not been charged
Give the necessary adjusting journal entry and show the working notes clearly. Also, state any two values that the partners wanted to communicate to the society.
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Solution
| Journal Entries | ||||
| Date | Particulars | L.F |
Debit Rs |
Credit Rs |
|
Karan’s Capital A/c Dr. To Amar’s Capital A/c To Varun’s Capital A/c (Being Omission of interest on drawings, now adjusted) |
567
|
105 462
|
||
Adjusting Table:
| Particular | Naveen | Seerat | Hina | Total |
|
Interest on Drawings(Dr.) Profit of `2,310 shared in Ratio 5:3:2(Cr.) |
(1,050) 1,155 |
(1,260) 693 |
- 462 |
2,310 (2,310) |
| Difference | 105(Cr.) | 567(Dr.) | 462(Cr.) | Nil |
Working Notes:
Calculation of Interest on Drawings:
interest on Amar's Drawings = `30000xx6/100 xx 7/12 = 1050`
interest on Amar's Drawings = `36000 xx 6/100 xx 7/12 = 1260`
Note: the amount withdrawn by Varun (Rs 1,50,000) is the withdrawal of capital and not drawings
Values involved in the above scenario are as follows:
Duty for Nation
Upliftment of Victims
