Question

A and B are partner sharing profit in 7:3 ratio , fixed capital 200000 and 100000 respectively closing book for the year 2021 the accountant realised that interest on capital is provided @12 % p.a instead of@10% p.a the amount of adjustment entry will be
(a) 200. (c)600
(b)400. (d) None of this
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Answer 1

Answer:

option (d) None of this

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Answer 2

Answer:- d) none of this

Solution of the Problem,

Given: A and B are partner sharing profit in 7:3 ratio

            fixed capital of A is Rs. 200000 and B is Rs.100000

To Find: The amount of adjustment entry in the books of A and B

Solution: The profit sharing ratio of A:B is 7:3.

      Fixed capital of A is Rs. 200000 and B is Rs.100000

               Therefore, Total fixed capital is 300000.

               Interest on capital (mistakenly) = 12% of 300000 is 36000.

               Interest on capital (correct)= 10% of 300000 is 30000.

          The amount of adjustment will be 36,000-30000=6000

 Since, the profit sharing ratio of A:B is 7:3

Therefore, A's adjustment=  6000* 7/10=4200

and, B's adjustment=6000* 3/10=1800

Answer:- The amount of adjustment of A and B will be Rs.4200 and Rs.1800 respectively.