Question

On 1st April, 2023, the capitals of A and B were ₹ 4,00,000 and ₹ 2,00,000, respectively. They divided profits in their capital ratio. Profits for the year ended 31st March, 2024, were ₹ 3,00,000, which have been duly distributed among the partners, but the following transactions were not passed through the books:

1. Interest on capitals @ 12% p.a.
2. Interest on drawings A ₹ 12,000; B ₹ 10,000.
3. Commission due to B ₹ 20,000 on a special transaction.
4. A is to be paid a salary of ₹ 50,000.

You are required to pass a journal entry on 10th April, 2024, which will not affect the profit and loss account of the firm and at the same time will rectify the errors.

Answer 1

Particulars	A	B	Total
Interest on Capital (Cr.)	48,000	24,000	72,000
Salary	50,000	-	50,000
Commission	-	20,000	20,000
	98,000	44,000	1,42,000
Less: Interest on Drawings	12,000	10,000	22,000
	86,000	34,000	1,20,000
Less: Division of Firm’s Loss of ₹ 1,20,000 in 4:2 (Dr.)	80,000	40,000	1,20,000
Net Effect	(Dr.) 6,000	(Cr.) 6,000

 

Adjustment Entry
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2024
April 10	B’s Capital A/c   ...Dr.		6,000	-
	To A’s Capital A/c		-	6,000
	(Adjustment of omissions.)