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Question
Abdul, Kadir and Kasim were partners in a firm supplying food items. They were sharing profits in the ratio of 5:3:2. Their capitals on 1st April, 2010 were Rs 1,00,000, Rs 1,50,000 and Rs 3,00,000 respectively. After the floods in Uttaranchal, all partners decide to personally help the flood victims. For this Abdul withdrew Rs 20,000 from the firm on 1st September 2012, Kadir instead of withdrawing cash from the firm took some food items amounting to Rs 24,000 from the firm and distributed to the flood victims. On the other hand, Kasim withdrew Rs 1,00,000 from his capital on 1st January 2013 and provided a Mobile Medical Van for medical facilities in the flood affected area. The partnership deep provides for charging interest on drawings @ 6% p.a. After the Final Accounts were prepared it was discovered that interest in drawings had not been charged. Give the necessary adjusting journal entry and show the working notes clearly. Also, state any two values that the partners wanted to communicate to the society.
Solution
| Journal Entries | ||||
| Date | Particulars | L.F |
Debit Rs |
Credit Rs |
|
Kadir’s Capital A/c Dr. To Abdul’s Capital A/c To Kasim’s Capital A/c (Being omission of interest on drawings, now adjusted) |
378
|
70 308
|
||
Adjusting Table:
| Particulars | Abdul | Kadir | Kasim | Total |
| Interest on Drawings(Dr.) | (700) | (840) | - | 1,540 |
| Profit of `1,540 shared in Ratio 5:3:2 (Cr.) | 770 | 462 | 308 | (1,540) |
| Difference | 70(Cr.) | 378(Dr.) | 308(Cr.) | Nil |
Working Notes:
Calculation of Interest on Drawings:
Interest on Abdul's Drawings = `20000 xx 6/100 xx 7/12 = 700`
Interest on Kadir's Drawings = `24000 xx 6/100 xx 7/12 = 840`
Values involved in the above scenario are as follows:
Duty for Nation
Upliftment of Victims
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