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1.18 Double Entry Book Keeping (Section A)—ISC XII
ADJUSTMENT ENTRY
Date Particulars L.F. Dr. (`) Cr. (`)
Naman’s Current A/c ...Dr. 32,000
Akash’s Current A/c ...Dr. 16,000
To Vivek’s Current A/c 48,000
(Being the adjustment entry passed)
3. Current A/c Balances and Interest thereon: Vivek (`) Naman (`) Akash (`)
Given 1,00,000 80,000 (60,000)
Add/Less: Adjustment 48,000 (32,000) (16,000)
1,48,000 48,000 (76,000)
Interest on Current A/cs @ 10% p.a. 14,800 4,800 (7,600)
4. Divisible Profit = ` 7,48,575
Akash’s Share of Profit (Actual) = ` 1,66,350
Whereas, his Guaranteed Share of Profit = ` 2,00,000
Deficiency in Akash’s Share of Profit = ` 33,650, which will be met by Vivek and Naman equally.
Illustration 16.
Karan, Hari and Ashish commenced business on 1st April, 2019 as partners with capitals of ` 2,00,000;
` 6,00,000 and ` 3,00,000. They mutually agreed for:
(i) 10% p.a. interest on capitals;
(ii) 15% p.a. interest on drawings;
(iii) Karan will get 5% commission on sales;
(iv) Hari will get ` 25,000 per month as salary; and
(v) Balance of profit to be distributed in the ratio of 2 : 2 : 1.
Ashish also provided a loan of ` 1,00,000 @ 16% p.a. to the firm.
Total sales during the first year (i.e., year ended 31st March, 2020) was ` 40,00,000 and the net profit at
the end of the year was ` 10,86,250 (after providing interest on loan).
During the year, Karan introduced ` 6,00,000 to the firm as additional capital on 30th September, 2019 but
Hari withdrew ` 1,00,000 out of his capital on the same date Their drawings were:
Partners On 30th Jun, On 30th September, On 31st December,
2019 (`) 2019 (`) 2019 (`)
Karan 50,000 90,000 1,00,000
Hari 80,000 80,000 80,000
Ashish 90,000 30,000 60,000
You are required to prepare Profit and Loss Appropriation Account for the year ended 31st March, 2020
and Partners’ Capital and Current Accounts.