Question

Ram, Shyam and Mohan were partners in a firm sharing profits and losses in the ratio of 2 : 1 : 2. Their capitals were fixed at ₹ 3,00,000, ₹ 1,00,000, ₹ 2,00,000. For the year ended 31st March, 2018, interest on capital was credited to them @ 9% instead of 10% p.a. The profit for the year before charging interest was ₹ 2,50,000. Show your working notes clearly and pass necessary adjustment entry.

Answer 1

The necessary adjustment entry is given below.

Explanation:

Given,

Ram, Shyam and Mohan sharing profits and losses in the ratio of 2 : 1 : 2

Their capitals were fixed at ₹ 3,00,000, ₹ 1,00,000, ₹ 2,00,000.

The interest on capital was credited to them @ 9% instead of 10% p.a

Calculation of Interest on Capital 10% p.a.

Interest on Ram's Capital

$=3,00,000 \times \frac{10}{100}=30,000$

Interest on Shyam's Capital

$=1,00,000 \times \frac{10}{100}=10,000$

Interest on Mohan's Capital

$=2,00,000 \times \frac{10}{100}=20,000$

Calculation of Interest on Capital 9% p.a.

Interest on Ram's Capital

$=3,00,000 \times \frac{9}{100}=27,000$

Interest on Shyam's Capital

$=1,00,000 \times \frac{9}{100}=9,000$

Interest on Mohan's Capital

$=2,00,000 \times \frac{9}{100}=18,000$

As per the adjustment entry given below, an amount of Rs. 200 and Rs. 400 has been obtained from Shyam and Mohan and must be credited to Ram's Capital account.

Answer 2

Explanation:

T S Grewal Question no.64