ACCOUNTING FOR PARTNERSHIP FIRMS FUNDAMENTALS 1.

137
[Hints: () Ifit is not clearly mentioned whether the balance of a Current Account is
Debit or Credit, it will be presumed that its balance is Credit.
(2) Intereston Drawings will be calculated for six
months.]J
Adjustments in the Closed Accounts
Q. 40. After the accounts of the patnership have been drawn up and the books
closed off. it is discovered that interest on capitals@8% p.a. as provided in the
partnership agreement has been omitted to be recorded. Their capital accounts at the
beginning ofthe year stood as follows: A R8,00,000; B T4,00,000; C 3,00,000. Their
profit sharing ratio was 2: 1:1. nstead of altering the Balance Sheet it is decided to
pass necessary adjusting entry at the beginning of the next year.
You are required to give the necessary journal entry.
TAns. C's Capital A/c Dr. 6,000
To A's Capital A/c 4,000
To B's Capital A/c 2,000]
Q. 41.4, B, C and D are partners sharing profits in 2: 2:1:1. They distributed
the profit for the year ending 31st March 2020, 79,00,000 without providing for the
following
() Salary to A @15,000 per month.
() Salary to B and D@ T30,000 per quarter to each partner.
Give necessary adjusting journal entry.
[Ans. B's Capital A/c Dr. 20,000
C's Capital A/c Dr. 70,000
To A's Capital A/c 40,000
To D's Capital A/c 50,000]
Q. 42. A, B and C are partners sharing profits and losses in the ratio of 1:2: 3.
They have omitted interest on capital @8% p.a. for two years ended 3 1st March, 2022.
Their fixed capitals were 4,00,000, F6,00,000 and R8,00,000 respectively. Pass the
necessary adjusting entry.
[Ans. C's Current A/c Dr. 16,000
To A's Current A/c 16,000]
Q. 43. A, B and C are partners sharing profits and losses in the ratio of 5 :3 1.
After the final accounts have been prepared, it was discovered that interest on
drawings had not been taken into consideration. The interest on drawing of partners
amounted to A 78,000, B 76,000 and C 4,000. Give the necessary adjusting journal
entry.
[Ans. C's Capital A/e Dr. 2,000
To A's Capital A/c 2,000]
Q. 44. A, B, C and D are partners sharing profits and losses in 2 2:3 3
respectively. After the accounts of the year had been closed, it was found that interest
on drawings @ 6% p.a. has not been taken into consideration. The drawings of the
partners were:A 20,000; B R24,000; C32,000 and D 44,000. Give the necessary
adjusting entry.
 ACCOUNTING FOR PARTNERSHIP FIRMS- FUNDAMENTAL
1.138
D's Capital A/c Dr. 240
[Ans. 120
To A's Capital A/c
To C's Capital A/c 1201
in 2 :I ratio. During the year enda.
Q. 45. A and B were partners sharing profits
31st March, 2022, A's drawings were 50,000 per month drawn in the beginnina
drawn at the end of evew
every month and B's drawings were25,000 per month
month. After the preparation of final accounts, it was discOvered that interest on 4
drawings 12% p.a. was not taken into consideration. Give the necessary adjusting
entry on 1st April, 2022
A's Capital A/c Dr. 13,000
[Ans.
To B's Capital A/c 13,000]
Q. 46. Anil, Sunil and Sanjay have omitted interest on Capitals for two vears
ended on 31st March, 2022. Their fixed capitals in two years were Anil F8,00.000
Sunil 7,00,000 and Sanjay 3,00,000. Rate of interest on Capital is 10% p.a. Their
profit Sharing ratios were in first year 4: 3 :2 and in second year 3 : 2 :1.
Give necessary adjusting entry at the beginning of next year.
[Ans. Current A/cs of Anil & Sanjay will be debited by T10,000 each and Current
A/c of Sunil will be Credited by T20,000.]

Q.47. P, Qand R are partners sharing profits in the ratio of 2: 1:1. Theircapitals
as on 1st April, 2021 were R50,000, R30,000 and T20,000 respectively. At the end of
the year ending 31 st March, 2022 it was found out that interest on capitals@ 12% p.a.,
salaries to P, T500 per month and R T1,000 per month were not adjusted from the
profits. Show adjusting entry to be made in the next year for above adjustments.
[Ans. Capital A/cs of P and Q will be debited by R3,000 and 3,900 respectively;
and Capital A/c of R will be credited by T6,900.]
Q. 48 (A). On lst April, 2021 the Capitals of A and B were 74,00,000 and
T2,00,000 respectively. They divided profits in their capital ratio. Profits for the year
ended 31st March, 2022 were T3,00,000 which have been
duly distributed among the
partners, but the following transactions were not passed through the books:
(a) Interest on Capitals12% p.a.
(b) Interest on Drawings A T12,000; B 10,000.
(c) Commission due to B R20,000 on a special transaction.
(d) A is to be paid a salary of R50,000.
You are required to pass a
journal entry on 10th April, 2022 which will not affect
the P&L A/c of the firm and at the same
time will rectify the errors.
[Ans. B's Capital A/c
Dr. 6,000
To A's Capital A/c 6,000]
Q. 48 (B). Kumar and Raja were
partners in a firm sharing
fixed capitals were Kumar 9,00,000 and profits
7:3. Their in the ratio or
Raja 74,00,000.
partnership deed provided for the following but the profit for the The
without providing for year was distributed
() Interest on capital @9% per annum.
ACCOUNTING FOR PARTNERSHIP FIRMS- FUNDAMENTALS 1.139

(i) Kumar's salary 50,000 per year and Raja's salary3,000 per month.

The profit for the year ended 31.3.2022 was 2,78,000.

Pass the adjustment entry.
[Ans. Kumar's Current A/c Dr. 11,100
To Raja's Current A/c 11,100]
Q. 49. A, B and C are partners sharing profits in the ratio of 2:2: 1. Their fixed
capitals were 4,00,000, 2,50,000 and 1,00,000 respectively. Net profit for the year
ending 31st March, 2022 amounted to 2,20,000 which was distributed without
providing for the following:
) Salary to B R5,000 p.m. and to C T10,000 per quarter.
(i) Interest on capital @6% p.a.
(ii) Commission to Manager @10% after charging such commission.
Pass necessary rectifying entry.
[Ans. A's Current A/c Dr. 42,000
To B's Current A/c 9,000
To C's Current A/c 13,000
To Manager's Commission Outstanding Ac 20,000]
Q. 50. Suresh and Ramesh were partners in a firm sharing profits in the ratio of
3:2. Their fixed capitals were Suresh 9,00,000 and Ramesh 76,00,000. The
partnership deed provided for the following:
() Interest on capital @ 5% per annum.
(ii) F60,000 per annum salary to Suresh and salary2,000 per month to
Ramesh. The profit earned by the firm for the year ended 31-3-2022 was
2,34,000.
The profits were divided equally without providing for the above.
Pass adjustment entry

[Ans. Ramesh's Current Ac Dr. 33,000

To Suresh's Current A/c 33,000]
Q. 51. A, B and C were partners in a firm. On 1-4-2021 their capitals stood at
75,00,000, F2,50,000 and 2,50,000 respectively. As per the provisions of the
partnership deed:
(a) C was entitled for a salary of R10,000 p.m.
(6) Partners were entitled to interest on capital at 5% p.a.
(c) Profits were to be shared in the ratios of capitals.
The net profit for the year ended 31.3.2022 of T3,30,000 was divided equally
without providing for the above terms.
Pass an adjustment entry to rectify the above error.

[Ans. Dr. 5,000

A's Capital A/c
B's Capital A/c Dr. 57,500
To C's Capital A/c 62,500
140 ACCOUNTING FOR PARTNERSHIP FIRMS FUNDAMENTALs
Q. 52. A, B and C
were partners in a firm. Their capitals were
A1,00,000, B
2,00,000 and C 3,00,000 respectively on 1st April, 2021. According to the
partnership deed they were entitled to an interest on capital @5% p.a. In addition
was also entitled to draw a salary of T5,000 per month. C was entitled to a
commission
of the
S%on profits after eharging the interest on capital but before charging the
payable to A. The net profits for the year ended 31st March, 2022 were R3,60,000
salary
distributed in the ratio of their capitals without providing for any of the above
adjustments. The profits were to be shared in the ratio 2:3:5. Pass the necessary
adjustment entry showing the workings clearly.
[Ans. B's Capital A/c Dr. 33,950
C's Capital A/c Dr. 21,750
To A's Capital A/c 55,700]
Q.53. The partners of a firm distributed the profits for the year ended 31st March,
2022, R1,50,000 in the ratio of 2: 2:1 without providing for the following
adjustments:
() A and B were entitled to a salary of 71,500 per quarter.
(i) Cwas entitled to a commission of 18,000.
(i) A and C had guaranteed a minimum profit of T50,000 p.a. to B.
(iv) Profits were to be shared in the ratio of 3:3:2.
Pass necessary journal entry for the above adjustments in the books of the firm.

[Ans. A's Capital A/c Dr. 12,000

B's Capital A/c Dr. 4,000
To C's Capital A/c
16,000]
Q.54. A, B and C were partners in a firm. Their partnership deed
profits shall be divided as follows: provided that the
First 60,000 in the ratio of
3:2:1;
Remaining profits will be shared equally.
The profits for the year ended 31st March, 2019 were 1,50,000 which had been
distributed among the partners. On Ist April, 2018 their Capitals were A 4,00,000, B
73,00,000 and C 2,00,000. Interest on Capital was to be provided @ 8% p.a. which
was omitted to be
provided before distribution of profits.
Pass necessary rectifying entry for the same.
[Ans. C's Capital A/c Dr. 8,000
To A's Capital A/c
8,000]
Q. 55. X, Yand Z are partners in a firm sharing profits and losses in the ratio
5:3:2. Their capitals (fixed) are 2,00,000; 1,50,000; 1,25,000respectively. For
the year ended 31st March, 2022 interest on capital was credited to them @ 8% instead
of 10%.
Give adjusting journal entry.
[Ans. X's Current A/c will be debited by 750; Y and Z's Current A/cs will be
credited by T150 and 600 respectively.]
-

FUNDAMENTALS
1.141
ACCOUNTING FOR PARTNERSHIPFIRMS
Care partners in a firm sharing profits and losses in the ratio
of
Q. 56. A, B and
R2,00,000 and R3,00,000 respectively.
4:3:3. Their fixed capitals were R1,00,000,
was credited to them 10%
Forthe year ended 3lst March, 2022 interest on capital
instead of 9% p.a. Pass the necessary adjusting journal entry.
B's Current A/c Dr. 200
[Ans.
C's Current A/e Dr. 1,200
To A's Current A/c 1,400]
Current Accounts will be debited or credited.
Note: Since the capitals are fixed,
ratio of 1:2:3.A withdrew
Q.57. A, B and C were partners sharing profits in the
the year and C withdrew 715,000
75,000 every month, B withdrew T60,000 during 31st March 2021,
during each quarter. It was discovered that for the year ending
interest on drawings was charged @ 8% p.a. whereas there
is no provision for interest
on drawings in the partnership deed. Pass necessary rectifying entry.
C's Capital A/c Dr. 1,200
[Ans.
To A's Capital A/c 1,200]
Hint: Interest on each partner's drawings R2,400.
drawn and the books
Q. 58. After the accounts of a partnership have been up
closed off, it is discovered that for the years ended 31st March, 2021 and 2022, interest
has been credited to the partners upon their capitals at 5% per annum although,
no

provision for interest is made in the partnership agreement.

The amounts involved are-
Interest Credited
Year B

2021 2,400 1,320

4,200
2022 4,320 2,520 1,320
You are required to put through adjusting entry as on Ist April, 2022, ifthe profits
and in 2022, 3:4:3.
were shared as follows in 2021, 2:2:1
Ans. A's Capital A/c Dr. 2,904
To B's Capital A/c 1,512
To C's Capital A/c 1,392]
Q. 59. Sachin, Kapil and Rashmi have been sharing profits in the ratio of 3:2:1
respectively. Rashmi wants that she should share profits equally along with Sachin and
Kapil and she further wants that change in profit sharing ratio should be applicable
retrospectively for the last three years. Other partners have no objection to this. The
profits for the last three years were 60,000, 747,000 and 755,000. Record the
adjustment by means of a journal entry.
Ans Sachin's Capital A/c Dr. 27,000
To Rashmi's Capital A/c 27,000]
Q.60 (A). Mohan, Vijay and Anil are partners, their capitals being R30,000,
25,000 and T20,000 respectively. In arriving at these figures, the profits for the year
ended, 31st March, 2022 R24,000 has already been credited to the partners in the
proportion in which they share profits. Their drawings were R5,000 (Mohan); T4,000
 1.142 ACCOUNTING FOR PARTNERSHIP FIRMS
(Vijay) and 3,000 (Anil) for the year ending 31st March, 2022, Suihoo
FUNDAMENTA
following omissions were noticed and it was decided to bring them intobsequer
Account. the
the
()Interest on Capital at 10%p.a.
(in) Interest on Drawings Mohan 250, Vijay F200 and Anil 150,
Make the necessary journal entry and prepare Capital Accounts of Partnen

Mohan
[Ans. Opening Capitals- 27,000, Vijay 21,000, Anil
715,000;unts
Anil's Capital by 550 and Cr. Mohan's Capital by R550. Adjusted Capital Dr
balances Mohan R30,550; Vijay F25,000; Anil 19,450.]

Q. 60 (B). The capitals of A, B and C stood at R20,000, 15,000 and 10 o

respectively after the necessary adjustment in respect of drawings and net profite
Subsequently, it was discovered that interest on capital at 10% p.a. and interet
on
drawings 130, F90 and 750 respectively have been ignored. Profitofthe year alread
adjusted was 10,000. Drawings of the partners were 1,000, R 800 and 7500
respectively. They share profits and losses in the ratio of 2:1:1. Give necessarv
journal entry to rectify the accounts.
[Ans. Opening Capitals:A R16,000; B T13,300 and C R8,000; Debit A's Capital
Alc by R260 and C"s Capital A/c by z115 and Credit B's Capital A/c by R375]
Q.60 (C). A and B are partners in a business sharing profits and lossesin the ratio
of 3: 2. Their capitals on 31st March, 2022, after the adjustment of net profits and
drawings amounted to 2,00,000 and 1,50,000 respectively. Later on, it was
discovered that interest on Capital at 8% per annum, as provided for in the partnership
deed, had not been credited to the partners' capital accounts before the distribution of
profits. The year's net profit amounted to 75,000 and the partners had withdrawn
724,000 each. Instead of altering the signed balance sheet, it was decided to make an
adjustment entry at the beginning of the new year crediting or debiting the Partners'
Accounts. Give the necessary journal entry as also a statement of details arriving at the
amount of adjusting entry.
[Ans. Opening Capitals A R1,79,000 and B 1,44,000; Debit A's Capital A/c by
1,184 and Credit B's Capital Ac by F1,184.]
Q.61. Assuming the capitals are fixed in Question 60 (A), (B) and (C), givethe
necessary adjusting journal entry.
[Ans. (A)
Anil's Current A/c Dr. 450
To Mohan's Current Alc 450
o irt o (B) A's Current A/c
o

Dr. 245 lt zol

108 t e
C's Current A/c 908 Dr.
To B's Current A/C Je 353

(C) A's Current A/c Dr. 800

To B's Current Ac 800]