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On 31st March, 2018, after the closing of the accounts, the Capital Accounts of P, Q and R stood in the books of the firm at ₹ 40,000; ₹ 30,000 and ₹ 20,000 respectively. Subsequently, it was discovered that interest on capital @ 5% had been omitted. Profit for the year ended 31st March, 2018 amounted to ₹ 60,000 and the partners drawings had been P ₹ 10,000, Q ₹ 7,500 and R ₹ 4,500. The profit-sharing ratio of P, Q and R is 3 : 2 : 1. Give necessary adjustment entry. |
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Answer» essary adjustment entries are - JournalP's CAPITAL Ac DR 300 To Q's Capital Ac Dr 8 To R's Capital Ac Dr 292 Working NotesCapital at the beginning of yearParticulars P Q R Closing Capital 40,000 30,000 20,000 + Drawings 10,000 7,500 4,500 - Profit 30,000 20,000 10,000 Opening Capital 20,000 17500 14500Interest on CapitalP - 20,000 x 5/100 = 1000Q - 17,500 x 5/100 = 875R - 14,500 x 5/100 = 725Adjustments Interest - Loss ( 3:2:1)P - 1000 - 1300 = 300Q - 875 - 867 = 8R - 725 - 433 = 292 |
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