C and D were sharing profits in the ratio of 3:1. Profits as per books for 2015-16 amounted to 40,000. In
April 2016, they agreed to change the profit sharing ratio to 5:3 with retrospective effect from 1st April, 2015. It
was found that outstanding expenses of 4,000 as on 31st March, 2015 and outstanding expenses of
3,000 as on 31st March, 2016 had not been taken into account while drawing up the final accounts for
2014-15 and 2015-16. Also by mistake interest on drawings had been ignored while preparing the accounts
for 2015-16 such interest being 600 on C's drawings and 300 on D's drawings. Pass the necessary journal
entries to adjust the capitals of partners.
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Answer:
D's capital a/c dr. 75
To c's capital a/c 75
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