Question

Anand, Ridhi and Shyam were partners in a firm, sharing profits and losses in the ratio of 2 : 2 : 1. Their fixed capitals were ₹ 1,00,000, ₹ 60,000, and ₹ 40,000, respectively. For the year ended 31^st March, 2023, interest on capital was credited to their capital accounts @ 9% p.a instead of 7% p.a. Pass the necessary adjusting journal entry.

Answer 1

Adjustment Table
Particulars	Anand	Ridhi	Shyam	Firm
Wrongly allowed int. on capital @ 9%	(9,000)	(5,400)	(3,600)	(18,000)
Correct int. on capital @7%	7,000	4,200	2,800	14,000
Wrong distribution	(2,000)	(1,200)	(800)	(4,000)
Profit to be credited	1,600	1,600	800	4,000
Net Effect	(400)	400	Nil	Nil

 

Particular	Amt	Amt
Anand's Current A/c   ...Dr.	400
To Ridhi's Current A/c		400
(Being adjustment entry passed)