Question

Atul and Gita were partners in a firm sharing profits and losses in the ratio of 3 : 2. Their fixed capitals were ₹ 4,00,000 and ₹ 2,00,000 respectively. After the accounts for the year were prepared, it was noticed that interest on capital @ 6% p.a., as provided in the partnership deed, was not credited to the capital accounts of partners before distribution of profits.

Pass the necessary adjusting Journal entry. Show your workings clearly.

Answer 1

Journal Entries
Date	Particulars	L.F.	Amount (₹)	Amount (₹)
	Gita's Current A/c   ...Dr.		2,400	-
	To Atul's Current A/c		-	2,400
	(Being error rectified)

 

Adjustment Table
Particulars	Atul	Gita	Total
Interest on capital (Cr.)	24,000	12,000	36,000
Profit already distributed (Dr.)	21,600	14,400	36,000
Difference	2,400 (Cr.)	2,400 (Dr.)