12th | Accounting for Partnership Firm – Fundamental | Question No. 66 To 70 | Ts Grewal Solution 2025-2026

Pass the necessary adjusting entry and show the working clearly.

JOURNAL
Date	Particulars		LF	Dr. (Rs.)	Cr. (Rs.)
2025	Rahim's capital A/c	Dr.		3,000
31st March	To Karan’s capital A/c				3,000
	(Being Interest on capital was omitted now adjusted)

 

1. Interest on capital: Pranav - 50000; Karan - 30000; Rahim - 20000.

Total interest on capital was to be credited = 1,00,000, Which is more than the profit  78,000.

2. Profit is to be distributed in the ratio of interest on capital which is 5:3:2

Pranav =78,000 × 5/10 =  39,000

Karan=78,000 × 3 = 23,400

Rahim =78,000 × 2 / 10 = 15,600

3. Wrongly distributed as follow in profit sharing ratio 3:2:1

Pranav =78,000×3/6= 39,000

Karan =78,000×2/6= 26,000

Rahim =78,000×1/6= 13,000

4. Calculation of amount to be adjusted

	Pranav	Karan	Rahim
Amount to be credited	39,000	23,400	15,600
Wrongly Amount to be credited	39,000	26,000	13,000
	nil	2,600	2,600

 

On 31st March, 2025, after the closing of the accounts, the Capital Accounts of P, Q and R stood in the books of the firm at  ` 40,000;  ` 30,000 and  ` 20,000 respectively. Subsequently, it was noticed that interest on capital @ 5% had been omitted. Profit for the year ended 31st March, 2025 was  ` 60,000 and the partners' drawings had been P –  ` 10,000, Q –  ` 7,500 and R –  ` 4,500.  Profit-sharing ratio of P, Q and R is 3 : 2 : 1.

Give necessary adjustment entry.

Journal
Date	Particulars		L.F.	Debit ( `)	Credit ( `)
2025 Mar.31	P’s Current A/c	Dr.		300
	To Q’s Capital A/c				8
	To R’s Capital A/c				292
	(Interest on Capital was omitted, now adjusted)

Working Notes:

 

WN 1Calculation of Capital at the beginning (as on April 01, 2024)

 

Particulars	P	Q	R
Capital as on March 31, 2025  Closing)	40,000	30,000	20,000
Add: Drawings	10,000	7,500	4,500
Less: Profit ` 60,000 (3:2:1)	(30,000)	(20,000)	(10,000)
Capital as on April 01, 2024 (Opening)	20,000	17,500	14,500

WN 2Calculation of Interest on Capital

Interest on P’s capital=20,000×5/100=1000

Interest on Q’s capital=17,500×5/100=875
Interest on R’s capital=14,500×5/100=725
WN 3

Statement Showing Adjustment
Particulars	P	Q	R	Total
Interest on Capital (to be credited)	1,000	875	725	2,600
For sharing above Loss (3:2:1)	(1,300)	(867)	(433)	(2,600)
Net Effect	(300)	8	292	NIL

 

Mohan, Vijay and Anil are partners, the balances of their Capital Accounts being  ` 30,000,  ` 25,000 and  ` 20,000 respectively. In arriving at these amounts profit for the year ended 31st March, 2025,  ` 24,000 had already been credited to partners in the proportion in which they shared profits. Their drawings were  ` 5,000 (Mohan),  ` 4,000 (Vijay) and  ` 3,000 (Anil) during the year. Subsequently, the following omissions were noticed and it was decided to rectify the errors:
(a) Interest on capital @ 10% p.a.
(b) Interest on drawings: Mohan  ` 250, Vijay  ` 200 and Anil  ` 150.
Make necessary corrections through a Journal entry and show your workings clearly.

	Journal
Date	Particulars		L. F.	Debit ( `)	Credit ( `)
2025 March 31	Anil’s Capital A/c	Dr.		550
	To Mohan’s Capital A/c				550
	(Interest on capital and interest on drawings was omitted, now adjusted)

 

Working Notes:

 

WN 1Calculation of Capital at the beginning

Particulars	Mohan	Vijay	Anil	Total
Capital at the end	30,000	25,000	20,000	75,000
Add: Drawings	5,000	4,000	3,000	12,000
Less: Profit (1:1:1)	(8,000)	(8,000)	(8,000)	(24,000)
Capital in the beginning	27,000	21,000	15,000	63,000

 

WN 2Calculation of Interest on Capital

Interest on Mohan’s capital=27,000×10/100=2,700

Interest on Vijay’s capital=21,000×10/100=2,100

Interest on Anil’s capital=25,000×10/100=2,500

 

WN 3

Statement Showing Adjustment
	Mohan	Vijay	Anil	Total
Interest on Capital to be credited	2,700	2,100	1,500	6,300
Less: Interest on Drawings	(250)	(200)	(150)	(600)
Right Distribution of ` 5,700	2,450	1,900	1,350	5,700
Wrong Distribution of ` 5,700 (1 : 1 : 1)	(1,900)	(1,900)	(1,900)	(5,700)
Net Effect	550	Nil	(550)	NIL

 

WN 4Calculation of Final Profit Share of Partners

Total Corrected Profit Available for Distribution = Profit - Interest on Capital + Interest on Drawings = 24,000 – 6,300 + 600 = ` 18,300

Corrected profit of Mohan, Vijay, Anil each =18,300×1/3=6,100

 

Mudit, Sudhir and Uday are partners in a firm sharing profits in the ratio of 3 : 1 : 1. Their fixed capital balances are  ` 4,00,000,  ` 1,60,000 and  ` 1,20,000 respectively. Net profit for the year ended 31st March, 2018 distributed amongst the partners was  ` 1,00,000, without taking into account the following adjustments:
(a) Interest on capitals @ 2.5% p.a.;
(b) Salary to Mudit ` 18,000 p.a. and commission to Uday ` 12,000.
(c) Mudit was allowed a commission of 6% of divisible profit after charging such commission.
Pass a rectifying Journal entry in the books of the firm. Show workings clearly.

(CBSE Sample paper 2019)

In the books of Mudit, Sudhir and Uday Journal
Date	Particulars			L.F.	Debit ( `)	Credit ( `)
2024
March 31	Sudhir’s Current A/c		Dr.		6,000
	To Mudit’s Current A/c					1,000
	To Uday’s Current A/c					5,000
	(Being adjustment entry passed for rectification of errors)

Working Notes:  

Table Showing Adjustment
Particulars	Mudit’s Current A/c		Sudhir’s Current A/c		Uday’s Current A/c		Firm
	Dr. (`)	Cr. (`)	Dr. (`)	Cr. (`)	Dr. (`)	Cr. (`)	Dr. (`)	Cr. (`)
Profits wrongly Distributed (Dr.)	60,000		20,000		20,000			1,00,000
Interest on Capital to be
Provided (Cr.)		10,000		4,000		3,000	17,000
Salary to be provided (Cr.)		18,000					18,000
Commission to be provided (Cr.)		3,000				12,000	15,000
Profit correctly distributed (Cr.)		30,000		10,000		10,000	50,000
Balance to be adjusted	1,000(Cr.)		6,000(Dr.)		5,000(Cr.)		NIL

 

Divisible Profits	=	Profits before appropriation – (Interest on Capital + Salary + Uday’s Commission)
	=	` 1,00,000 – (17,000 + 18,000 + 12,000) =  ` 53,000
Mudit’s Commission	=	(Divisible Profit × Rate/ 100 + Rate)
	=	` (53,000 × 6/106) = ` 3,000

Piya and Bina are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following was the Balance Sheet of the firm as on 31st March, 2016:
 

Liabilities		`	Assets	`
Capitals:			Sundry Assets	1,20,000
Piya	80,000
Bina	40,000	1,20,000
		1,20,000		1,20,000

The profits  ` 30,000 for the year ended 31st March, 2016 were divided between the partners without allowing interest on capital @ 12% p.a. salary to Piya @  ` 1,000 per month. During the year Piyawithdrew  ` 8,000 and Bina withdrew  ` 4,000. Showing your working notes clearly, pass the necessary rectifying entry.

Journal
Particular		L.F.	Debit (`)	Credit (`)
Bina’s Capital A/c	Dr.		5,856
To Piya’s Capital A/c				5,856
(Adjustment made)

 

Particular	Piya	Bina	Total
Interest on Capital @ 12% p.a.	8,400	3,840	(12,240)
Salary	12,000	–	(12,000)
Profit (30,000 – 12,240 –12,000)	3,456	2,304	5,760
Right Share	23,856	6,144	(30,000)
Wrong Share	(18,000)	(12,000)	30,000
Net Effect	5,856 (Cr.)	5,856 (Dr.)	Nil

 

Working Notes:

Particular	Piya	Bina
Closing Capitals	80,000	40,000
Add: Drawings	8,000	4,000
Less: Profit Share	18,000	12,000
Opening Capital	70,000	32,000