(1.5 1.53
22. Aman, Raman and Suman are partners sharing profits and losses in equal
ratio. According to deed 10%pa. Interest on capital is allowed. But it was
discovered that they omitted to be recorded. Their capitals were 20.000,
40,000, 30,000 respectively. Give necessary adjustment entry
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Given data:
- Aman, Raman and Suman are partners in a firm sharing profits and losses equally.
- Their capitals were Rs 20,000, Rs 40,000 and Rs 30,000 respectively.
- Interest on capital was to be charged at 10% p.a., but was omitted.
Objective: To rectify the error.
Answer:
Calculation of interest on capitals:
Interest on capital = (Capital × Rate) ÷ 100
For Aman:
- Interest on capital = (Rs 20,000 × 10) ÷ 100 = Rs 2,000
For Raman:
- Interest on capital = (Rs 40,000 × 10) ÷ 100 = Rs 4,000
For Suman:
- Interest on capital = (Rs 30,000 × 10) ÷ 100 = Rs 3,000
Interest on capital will be recorded on the credit side of the adjustment table if they were omitted.
Calculation of profit/losses:
To determine profit/loss, observe the firm's balancing figure. If the balancing figure appears on the debit side, it indicates profit. Else, loss.
Balancing figure = Rs 9,000 [Cr.]
Calculation of loss shares:
Since they share profits equally, they must be distributed accordingly, i.e., in the ratio 1:1:1.
For Aman:
- Loss share = Rs 9,000 × 1/3 = Rs 3,000
For Raman:
- Loss share = Rs 9,000 × 1/3 = Rs 3,000
For Suman:
- Loss share = Rs 9,000 × 1/3 = Rs 3,000
Rectifying entry:
Aman's Current A/c ... Dr - Rs 1,000
- To Raman's Current A/c - Rs 1,000
The Adjustment Table has been attached below.
Attachments:
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