Question

On 31 Dec. 20x1 after the close of the account the Capital account of X, Y
and Z stood in the books of the firm at Rs 24,000, R$ 18,000 and Rs. 12,000
respectively. Subsequently it was discovered that interest on Capital @5% pa
had been omitted. The profit for the year ended 20xlamounted to Rs 36,000and
the partners' drawings had been x Rs. 6.000, Y Rs 4 500 and Z Rs. 2,700. The
profit sharing ratio of X, Y and Z was 3.2.1 Give the necessary adjusting entry.​

Answer 1

Answer:

Calculation of capital at the beginning

P Q R

Capital at the end 40000 30000 20000

Add;- drawings 10000 7500 4500

Less;profits (30000) (20000) (10000)

Capital at the beginning 20000 17500 14500

Interest on capital @ 5% 1000 875 725

The following adjustment entry needs to be passed:-

P's capital A/c Dr 1300

Q's capital A/c Dr. 867

R's capital A/c Dr 433

To Profit and loss Appropriation A/c 2600

(Profits to be reversed)

Table showing Adjustments to be made

Partners Profits to be written back Profits to be distributed

(60000-2600) Adjustements

P -30000 28700 -1300

Q -20000 19133 -867

R -10000 9567 -433

Explanation: