On March 31, 2017 the Balance in the Capital Accounts of Eluin, Monu and Ahmed, after Making Adjustments for Profits, - Bzziii.com

On March 31, 2017 the balance in the capital accounts of Eluin, Monu and Ahmed, after making adjustments for profits, drawing, etc; were Rs 80,000, Rs 60,000 and Rs 40,000 respectively. Subsequently, it was discovered that interest on capital and interest on drawings had been omitted. The partners were entitled to interest on capital @ 5% p.a. The drawings during the year were Eluin Rs 20,000; Monu, Rs 15,000 and Ahmed, Rs 9,000. Interest on drawings chargeable to partners were Eluin Rs 500, Monu Rs 360 and Ahmed Rs 200. The net profit during the year amounted to Rs 1,20,000. The profit sharing ratio was 3 : 2 : 1. Pass necessary adjustment entries.

                          Interest on Capital

Particulars	Eluin	Monu	Ahmed
Closing capital (2017)	80,000	60,000	40,000
Add: Drawings	20,000	15,000	9,000
Less: Profit (3:2:1)	(60,000)	(40,000)	(20,000)
Opening Capital(2018)	40,000	35,000	29,000

                         Adjustment for Profit

Particulars	Eluin	Monu	Ahmed
Interest on Capital	2,000	1,750	1,450
Less: Interest on Drawings	(500)	(360)	(200)
Distribution for 4,140	1,500	1,390	1,250
Less: wrong distribution for 4,140	(2,070)	(1,380)	(690)
	570	10	560

                               Journal Entries

Date	Particulars		L.F.	Amount	Amount
	Eluin’s Capital A/c	Dr.		570
	To Monu’s Capital A/c				10
	To Ahmed’s Capital A/c				560
	(Adjustment for Profit)

Chapter-2 Partnership Basic: Accounts

36 37 38 39 40