12th | Accounting for Partnership Firm – Fundamental | Question No. 61 To 65 | Ts Grewal Solution 2025-2026

Ram, Shyam and Mohan were partners in a firm sharing profits and losses in the ratio of 2 : 1 : 2. Their capitals were fixed at  ` 3,00,000,  ` 1,00,000,  ` 2,00,000. For the year ended 31st March, 2024, interest on capital was credited to them @ 9% instead of 10% p.a. The profit for the year before charging interest was  ` 2,50,000.
Show your working notes clearly and pass necessary adjustment entry.

	Journal
Date	Particulars		L.F.	Debit ( `)	Credit ( `)
2024 March 31	Shyam’s Current A/c	Dr.		200
	Mohan’s Current A/c	Dr.		400
	To Ram’s Current A/c				600
	(Interest on Capital adjusted)

Working Notes:

 

WN 1 Calculation of Interest on Capital 10% p.a.

Interest on Ram’s capital=3,00,000×10/100=30,000

Interest on Shyam’s capital=1,00,000×10/100=10,000

Interest on Mohan’s capital=2,00,000×10/100=20,000

 

WN 2 Calculation of Interest on Capital 9% p.a.

Interest on Ram’s capital=3,00,000×9/100=2,7000

Interest on Shyam’s capital=1,00,000×9/100=9,000

Interest on Mohan’s capital=2,00,000×9/100=18,000

 

WN 3

Statement Showing Adjustment
Particulars	Ram	Shyam	Mohan	Total
Interest on Capital credited at 10% p.a.	30,000	10,000	20,000	60,000
Interest on Capital wrongly credited at 9% p.a. reversed	(27,000)	(9,000)	(18,000)	(54,000)
Right distribution	3,000	1,000	2,000	6,000
Wrong distribution of ` 6,000 (2 : 1 : 2)	(2,400)	(1,200)	(2,400)	(6,000)
Net Effect	600	(200)	(400)	NIL

 

Ram, Mohan and Sohan were partners sharing profits in the ratio of 2:1:1. Ram withdrew `3,000 every month and Mohan withdrew `4,000 every month. Interest on drawings @ 6% p.a. was charged, whereas the partnership deed was silent about interest on drawings.

Showing your working clearly, pass the necessary adjustment entry to rectify the error.

Particulars	`	`
Ram’s Capital A/c   Dr, Mohan’s Capital A/c   Dr,             To Sohan’s Capital A/c (Being interest on Drawing Charged Wrongly, now Rectified)	180 630	810

 

Working notes:

WN1:

Table of Adjustments

	Ram	Mohan	Sohan
Interest on Drawing Wrongly Debited	1,080	-	1,440
Profits to be credited	1,260	630	630
Amount to adjusted	180(Dr.)	630(Dr.)	810(Cr.)

 

WN2: Interest on Drawing Wrongly Debited

Ram’s Interest on Drawing= 36,000×6/100×6/12=1,080

Sohan’s Interest on Drawing= 48,000×6/100×6/12=1,440

 

WN3:Profits to be credited (1,080+1,440=2,120)

Ram =  2,520×2/4=1,260

Mohan =2,520×1/4=630

Sohan = =2,520×1/4=630

 

 

Simrat and Bir are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March, 2025 after closing the books of account, their Capital Accounts stood at  ` 4,80,000 and  ` 6,00,000 respectively. On 1st May, 2024, Simrat introduced an additional capital of  ` 1,20,000 and Bir withdrew  ` 60,000 from his capital.On 1st October, 2024, Simrat withdrew  ` 2,40,000 from her capital and Bir introduced  ` 3,00,000. Interest on capital is allowed at 6% p.a. Subsequently, it was noticed that interest on capital @ 6% p.a. had been omitted. Profit for the year ended 31st March, 2025 amounted to  ` 2,40,000 and the partners' drawings had been: Simrat –  ` 1,20,000 and Bir –  ` 60,000.

Compute the interest on capital if the capitals are (a) fixed, and (b) fluctuating.

Case 1: If Capitals are fixed:

Calculation of Interest on Capital

Interest on Capital Simrat=(6,00,000×6×1/100×12)+(7,20,000×6×5/100×12)+(4,80,000×6×6/100×12)=35,400

Interest on Capital Bir=(3,60,000×6×1/100×12)+(3,00,000×6×5/100×12)+(6,00,000×6×6/100×12)=27,300

Working Notes:

WN1: Calculation of Opening Capital:

Particulars	Simrat	Bir
Capital at the end	4,80,000	6,00,000
Add: Drawings out of capital	2,40,000	60,000
Less: Fresh capital introduced	1,20,000	3,00,000
Capital at the beginning	6,00,000	3,60,000

 

Case2: If Capitals are Fluctuating:

Calculation of Interest on Capital

Interest on Capital Simrat=(5,76,000×6×1/100×12)+(6,96,000×6×5/100×12)+(4,56,000×6×6/100×12)= 33,960

Interest on Capital Bir=(3,24,000×6×1/100×12)+(2,64,000×6×5/100×12)+(5,64,000×6×6/100×12)= 25,140

Working Notes:

WN1: Calculation of Opening Capital:

Particulars	Simrat	Bir
Capital at the end	4,80,000	6,00,000
Add: Drawings out of capital	2,40,000	60,000
Add: Drawings out of profit	1,20,000	60,000
Less: Fresh capital introduced	1,20,000	3,00,000
Less: Profit already credited	1,44,000	96,000
Capital at the beginning	5,76,000	3,24,000

 

 

 

 

 

 

 

 

 

 

 

Mita and Usha are partners in a firm sharing profits in the ratio of 2 : 3. Their Capital Accounts as on 1st April, 2015 showed balances of  ` 1,40,000 and  ` 1,20,000 respectively. The drawings of Mita and Usha during the year 2015-16 were  ` 32,000 and  ` 24,000 respectively. Both the amounts were withdrawn on 1st January 2016. It was subsequently found that the following items had been omitted while preparing the final accounts for the year ended 31st March, 2016:
(a) Interest on Capital @ 6% p.a.
(b) Interest on Drawings @ 6% p.a.
(c) Mita was entitled to a commission of  ` 8,000 for the whole year.
Showing your working clearly, pass a rectifying entry in the books of the firm.

Journal
Particular		L.F.	Debit ( `)	Credit ( `)
Usha’s Capital A/c	Dr.		6,816
To Mita’sCapital A/c				6,816
(Adjustment made)

 

Particular	Mita	Usha	Total
Interest on Capital @ 6% p.a.	8,400	7,200	(15,600)
Interest on Drawings @ 6% p.a.	(480)	(360)	840
Commission	8,000	–	(8,000)
Right Share	15,920	6,840	(22,760)
Wrong Share	(9,104)	(13,656)	22,760
Net Effect	6,816 (Cr.)	6,816 (Dr.)	Nil

 

A, B and C were partners. Their fixed capitals were `60,000, `40,000 and `20,000 respectively. Their profit sharing ratio was 2 :2 : 1. According to the Partnership Deed, they were entitled to interest on capital @ 5% pa. In addition, B was also entitled to draw a salary of `1,500 per month. C was entitled to a commission of 5% on the profits after charging the interest on capital, but before charging the salary payable to B. The net profits for the year, `80,000, were distributed in the ratio of their capitals without providing for any of the above adjustments. Showing your workings clearly, pass the necessary adjustment entry. (CBSE 2019)

 

 

Date	Particulars				L.F.	Dr.`		Cr. `
31 March	A’s  current      A/c          To B ’s  current      A/      To C’s  current      A/ (Being omission of salary , interest on capital , commission now profit corrected)			Dr.		16,080		14,253 1,827
						16,080		16,080
Correct Profit and loss appropriation account year ended 31 March
Particulars		`	Particulars				`
To cc B=1500×12=18,000 To Commission (C=80,000-6,000×5/100)   To Interest on capital A-60,000×5/100=3,000 B-40,000×5/100=2,000 C-20,000×5/100=1,000 To profit A-52,300×2/5=20,920 B -52,300×2/5=20,920 C -52,300×1/5=10,460		18,000   3,700         6,000       52,300	By  Net profit				80,000 4,500
		80,000					80,000

 

Statement showing Adjustments
Particulars	A		B		C		FIRM
	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.
Interest on capital Salary omitted Commission omitted Correct Profit omitted Wrong Profit credited	40,000	3,000     20,920	26,667	2,000 18,000   20,920	13,333	1,000   3,700 10,460	6,000 18,000 3,700 52,300	80,000
Total	40,000	23,920	26,667	40,000			80,000	80,000
Net effect	16,080			14,263		1,827