Adjusting and Transfer Entries
Question 56: Aditi,
Bobby and Krish were partners in a firm sharing
profits and losses in the ratio of 5:3:2. Their capital were 5,00,000, 4,00,000 and 2,00,000 respectively. The partnership
deed provided for the following:
(a) Interest
on capital @ 10% per annum.
(b) Interest
on drawings @ 6% per annum.
(c) Interest
on partner's loan to the firm @ 9% per annum.
During the
year, Aditi had withdrawn Rs. 60,000 and Bobby
50,000. On 1st September, 2021, Krish had given a
loan of 40,000 to the firm.
Pass
necessary Journal entries in the books of the firm for the following
transactions for the year ended
31st March, 2022
(i) Allowing interest on Bobby's capital.
(ii)
Charging interest on Aditi's drawings.
(iii)
Providing interest on Krish's loan to the firm.
Also pass
transfer entries in the Profit & Loss Account/Profit & Loss
Appropriation Account, as the casemay be. (CBSE 2023)
Answer:
|
Date |
Particulars |
|
(Dr.) Rs. |
(Cr.) Rs. |
|
|
Adjusting Entries: |
|
|
|
|
|
Interest
on Capital A/c |
Dr. |
40,000 |
|
|
|
To Bobby's
Capital A/c by |
|
|
40,000 |
|
|
(Being
interest is allowed on capital) |
|
|
|
|
|
Interest
on Capital A/c |
Dr. |
40,000 |
|
|
|
To Bobby's Capital A/c |
|
|
40,000 |
|
|
(Being
interest is allowed on capital) |
|
|
|
|
|
Aditi's Capital A/c |
Dr. |
1,800 |
|
|
|
To Interest on Drawings A/c |
|
|
1,800 |
|
|
(Being
interest is charged on Drawing) |
|
|
|
|
|
Interest
on Krish's Loan A/c |
Dr. |
100 |
|
|
|
To Krish's Loan A/c |
|
|
100 |
|
|
(Being
interest is allowed on Loan) |
|
|
|
|
|
Transfer Entries: |
|
|
|
|
|
Profit
& Loss Appropriation A/c |
Dr. |
40,000 |
|
|
|
To Interest on Capital A/c |
|
|
40,000 |
|
|
(Being
interest is transferred) |
|
|
|
|
|
Interest
on Drawings A/c |
Dr. |
1,800 |
|
|
|
To Profit
& Loss Appropriation A/c |
|
|
1,800 |
|
|
(Being
interest is transferred) |
|
|
|
|
|
Profit
& Loss A/c |
Dr. |
2,100 |
|
|
|
To Interest on Krish's
Loan A/c |
|
|
2,100 |
|
|
(Being
interest is transferred) |
|
|
|
Working note:
1.
Interest
on drawing for six month since date of drawing is not given
2.
Interest
on Krish's Loan = 40,000 x 9/100 x 7/12 = 2,100.
Question
57:
Reya, Mona
and Nisha shared profits in the ratio of 3 : 2 : 1. The profits for the last three year were ` 1,40,000; ` 84,000 and ` 1,06,000 respectively. These profits
were by mistake shared equally. The error is now to be corrected.
Give
necessary Journal entry for the same.
Answer:
|
Journal |
||||
|
Particulars |
L.F. |
Debit ` |
Credit ` |
|
|
Nisha’s Capital A/c |
Dr. |
|
55,000 |
|
|
To Reya’s Capital A/c |
|
|
55,000 |
|
|
(Adjustment of
profit made) |
|
|
|
|
Working Note:
Total
Profits for Last 3 years = 1,40,000 + 84,000 +
1,06,000 = ` 3,30,000
|
Statement Showing Adjustment |
||||
|
Particulars |
Reya |
Mona |
Nisha |
Total |
|
Right Distribution of Profit (3 : 2 :1) |
1,65,000 |
1,10,000 |
55,000 |
3,30,000 |
|
Wrong Distribution of Profit (1: 1 : 1) |
(1,10,000) |
(1,10,000) |
(1,10,000) |
(3,30,000) |
|
Net Effect |
55,000 |
NIL |
(55,000) |
NIL |
|
|
|
|
|
|
Question
58:
Atul and Gita vwere
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. (CBSE 2024)
Pass the necessary adjusting Journal entry. Show your
workings clearly.
Answer:
|
Gita's Current A/C |
Dr. |
2,400 |
|
|
To Atul's
Current A/c |
|
|
2,400 |
|
(interest on capital was to be
credited, now adjusted) |
|
|
|
Interest on Capital was to be Credited
Atul = 4,00,000×6÷100= 24,000
Gita = 2,00,000×6÷100= 12,000
Adjustment Table
|
|
Atul |
Gita |
|
|
Interest was to be credited |
24,000 |
12,000 |
36,000 |
|
Interest was credited in profit
sharing ratio |
21,600 |
14,400 |
36,000 |
|
Amount to be adjusted |
2,400 |
2,400 |
|
|
|
Credit |
Debit |
|
Question
59:
Ram, Mohan
and Sohan sharing profits and losses equally have
capitals of `
1,20,000, ` 90,000 and ` 60,000 respectively. For the year
ended 31st March, 2024, interest was credited to them @ 6% instead of 5%.
Give adjustment Journal entry.
Answer:
|
Journal |
||||
|
Particulars |
L. F. |
Debit ( `) |
Credit ( `) |
|
|
Ram’s Capital A/c |
Dr. |
|
300 |
|
|
To Sohan’s Capital A/c |
|
|
300 |
|
|
(Interest on Capital was wrongly credited, now adjusted) |
|
|
|
|
|
|
|
|
|
|
Working Notes:
WN 1Calculation of Interest on Capital at
6% p.a.
Interest on
Ram’s capital=1,20,000×6/100=7,200
Interest on
Mohan’s capital=90,000×6/100=5,400
Interest on Sohan’s capital=60,000×6/100=3,600
WN 2Calculation of Interest on Capital at
5% p.a.
Interest on
Ram’s capital=1,20,000×5/100=6,000
Interest on Mohan’s
capital=90,000×5/100=4,500
Interest on Sohan’s capital=60,000×5/100=3,000
WN 3
|
Statement Showing Adjustment |
||||
|
Particulars |
Ram |
Mohan |
Sohan |
Total |
|
Interest on Capital wrongly credited at 6% p.a. reversed |
(7,200) |
(5,400) |
(3,600) |
(16,200) |
|
Interest on Capital credited at 5% p.a. |
6,000 |
4,500 |
3,000 |
13,500 |
|
Wrong Distribution |
(1,200) |
(900) |
(600) |
(2,700) |
|
Right Distribution of ` 2,700 (1:1:1) |
900 |
900 |
900 |
(2,700) |
|
Net Effect |
(300) |
NIL |
300 |
NIL |
|
|
|
|
|
|
Question 60:
Mohan, Suhaan and Adit were partners in
a firm sharing profits and losses in the ratio of 3:2:1. Their fixed capitals
were: ₹ 2,00,000, ₹ 1,00,000 and ₹
1,00,000 respectively. For the year ended 31st March, 2023, interest on capital
was credited to their accounts @ 8% p.a. instead of 5% p.a.
Pass
necessary adjusting Journal entry. Show your workings clearly. (CBSE 2024)
Answer:
|
Adit's Current A/c |
Dr. |
1,000 |
|
|
To Suhana's
Current A/c |
|
|
1,000 |
|
(Interest on capital was credited to
their accounts @ 8% p.a. instead of 5% p.a., now adjusted) |
|
|
|
Interest on capital was credited to
their accounts @ 8% p.a. instead of 5% p.a., 3% in excess was to be distributed
in profit sharing ratio of 3:2:1.
Adjustment Table
|
|
Mohan |
Suhaan |
Adit |
|
|
Interest was to be credited in profit
sharing ratio of 3:2:1 |
6,000 |
4,000 |
2,000 |
12,000 |
|
Interest was credited 3% in excess |
6,000 |
3,000 |
3,000 |
12,000 |
|
Amount to be adjusted |
Nil |
1,000 |
1,000 |
|
|
|
|
Credit |
Debit |
|