Question

A, B and C sharing profits in the ratio of 2 : 2 : 1, have fixed capitals of ₹3,00,000,
₹2,00,000 and ₹1,00,000 respectively. After closing the accounts for the year ending 31st
March 2019 it was discovered that interest on capitals was provided @ 12% instead of
10% p.a. In the adjusting entry:
(a) Cr. A ₹1,200; Dr. B ₹800 and Dr. C ₹400
(b) Dr. A ₹1,200; Cr. B ₹800 and Cr. C ₹400
(c) Cr. A ₹800; Cr. B ₹400 and Dr. C ₹1,200
(d) Dr. A ₹800; Dr. B ₹400 and Cr. C ₹1,200

Answer 1

Answer:

ioc @12% wrongly provided

=36000+24000+12000=72000

ioc @10%which was to be provided

=30000+20000+10000=60000

ioc to be provided less by 12000 Rs

more profits to be provided to partners =12000

A= 4800(cr) 6000(dr) =1200 dr

B=4800(cr) 4000(dr)=800cr

C=2400(cr) 2000(dr)=400cr

option b is correct