Anju, Manju and Mamta are partners whose fixed capitals were Rs 10,000, Rs 8,000 and Rs 6,000, respectively. As per the partnership agreement, there is a provision for allowing interest on capitals @ 5% p.a. but entries for the same have not been made for the last three years. The profit sharing ratio during there years remained as follows: Year Anju Manju Mamta 2014 4 3 5 2015 3 2 1 2016 1 1 1 Make necessary and adjustment entry at the beginning of the fourth year i.e. Jan. 2017.
Answers
Given : Anju, Manju and Mamta are partners whose fixed capitals were Rs 10,000, Rs 8,000 and Rs 6,000, respectively.
As per the partnership agreement, there is a provision for allowing interest on capitals @ 5% p.a. but entries for the same have not been made for the last three years. The profit sharing ratio during there years remained as follows: Year Anju Manju Mamta 2014 4 3 5 2015 3 2 1 2016 1 1 1
Solution :
Adjustment entry at the beginning of the fourth year i.e. Jan. 2017 is in the attachment below :
Extra information :
Past adjustments :
sometimes the adjustment have to made in the close partnership account because a certain address commission is taken place in the preparation of the final accounts is adjustment urgently required for account of the following errors :
- Omission of interest on capitals/ drawings /loans of the partners.
- Omission of salary , commission etc, due to a partner from the firm.
- Omission of outstanding expenses and accrued income from the final accounts.
- Change in the profit sharing ratio with effect from a back date.
Hope this answer will help you….
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