Question

X y and z shared the profits of rs. 750000 in the ratio 2:2:1 without prividing for interest on y loan. Y granted a loan of rs. 500000 in the beginning of accounting year, whereas the partnership deed is silent on interest on loan and profit sharing ratio. Give neceesary adjustment entry.

Answer 1

Answer:

Explanation:

JOURNALS

X's Capital                60000

Y's  Capital                60000

  To interest on Y's loan                 30000

   To Z 's Capital                              90000

Working

• Amount on loan  = 500000

Interest rate  = 6 %

= 500000 *  6 /100

= 30000

• total profit 750000

         Less interest  30000

Net profit       720000

Adjustment statement

Particulars                       X                                Y                Z                  Total

Wrong distribution     (300000)            (300000)       (150000)        (750000)

Right distribution        240000                 240000       240000          720000

Interest on loan             --                           ---                     ---                30000

                           -------------------------------------------------------------------------------------

                                (60000)                  (60000)           90000            ------