Question

Q16 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:

  Rectification entry is as follows :-

       Eleen's capital A/c   Dr. 3850

           To Monu's capital A/c         2950

           To Ahmad's capital A/c         900

(Being adjustment entry passed)

Calculation of Opening Capital         Eleen            Monu            Ahmad

     Closing capital                              1,60,000       1,20,000         80,000

    Add:Drawings                                  24,000         24,000         48,000

   Less:Profits credited                       (20,000)       (10,000)         (10000)

   Opening Capital                             1,64,000       1,34,000        1,18,000

   Interest on Capital @10%                   16,400        13,400          11,800

 Calculation of Interest on Drawings            Eleen                    Monu                   Ahmad

    Interest on Drawings                (24,000*5%*6.5/12)     (24,000*5%*6.5/12)      (48,000*5%*5.5/12)

                                                  =   650                                650                              =1100

                      Table Showing Adjustments To Be Made Particulars Eleen Monu Ahmad Interest on capital 16,400 13,400 11,800 Interest on Drawings (650) (650) (1100) Profit to be credited 400 200 200 Profit wrongly credited (20000) (10000) (10000) Net Effect (3850) 2950 900.