A, B and Care partners with capitals ₹50,000; ₹30,000 and ₹ 20,000 respectively. Under their agreement interest at 6% per annum is to be allowed on capital but no interest to becharged on drawings. Profits are shared in the ratio of 3:2: i.Cis to have a salary of ₹ 5,000 per annum. During the year 2018 partners drew-A ₹6,000; B₹5,000 and C₹6,000. In addition B had taken goods costing ₹2,000 for which no entry has been made in the books. Before allowing for the interest, salary and goods, the profits of the business for 2018, were found to be ₹ 60,000. Give the Profit and Loss A/c and the partner's Current A/c.
Answers
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Answer:
Calculation of Interest on capital
A = 30000*5% = 1500
B= 20000*5% = 1000
C= 10000*5% = 500
Salary to B = 500*12=6000
Calculation of C's commission = 30000-3000 = 27000*5/100= 1350
Profits to be distributed= 30000-3000-6000-1350 = 19,650
The adjustment entry to be passed is as follows:-
A's Capital A/c Dr. 3675
To B's capital A/c 2895
To C's capital A/c 780
(Being adjustment entry passed)
Table Showing Adjustment To be Made
A B C
Interest on capital 1500 1000 500
Salary 6000
Commission 1350
Profits to be distributed( 19650) 9825 5895 3930
Total 11325 12895 5780
Less: profits wrongly allocated (15000) (10000) (5000)
Adjustments (3675) 2895 780
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