Mannu and Shristhi are partners in a firm sharing profits in the ratio of 3 :2. Following information is of the firm as on 31st March, 2021: Liabilities ₹ Assets ₹ Mannu's Capital Shristhi's Capital 3,00,000 1,00,000 4,00,000 Drawings: Mannu Shristhi Other Assets 40,000 20,000 60,000 3,40,000 4,00,000 4,00,000 Profit for the year ended 31st March, 2021 was 50,000 which was divided in the agreed ratio, but interest @ 5% p.a. on capital and @ 6% p.a. on drawings was inadvertently omitted. Adjust interest on drawings on an average basis for 6 months. Give the adjustment entry. (NCERT, Modified) [Ans.: Debit Shristhi and Credit Mannu by * 2,880.)
Answers
Rectification Entry is as follows:-
Shristhi's capital A/c Dr 288
To Mannu's capital A/c 288
(Being adjustment entry passed)
Calculation of Opening Capital Mannu Shristhi
Closing capital 30,000 10,000
Less:profits (3000) (2000)
Opening capital 27,000 8000
Interest on capital @5% 1350 400
Drawings are already included in the capital. Interest on drawings is calculated for 6 months.
Table showing adjustments to be made
Particulars Mannu Shristhi
Interest on capital to be credited 1350 400
Interest on drawings to be debited (120) (60)
Profits to be credited 2058 1372
Profit wrongly credited (3000) (2000)
Net Effect 288 (288)