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M.50 Management Accounting (Section B)—ISC XII

2. (a) JOURNAL

Date Particulars L.F. Dr. (`) Cr. (`)
2020
March 31 X’s Capital A/c ...Dr. 44,000
To Y’s Capital A/c 20,000
To Z’s Capital A/c 24,000
(Being the short interest on capital provided and profits distributed in the
wrong ratio, now rectified)
Working Notes:
1. CALCULATION OF OPENING CAPITAL
Particulars X (`) Y (`) Z (`)
A. Closing Capital 60,000 2,20,000 4,40,000
B. Add: Drawings already debited 2,40,000 2,40,000 2,40,000
3,00,000 4,60,000 6,80,000
C. Less: Profit already credited 80,000 20,000 20,000
D. Opening Capital plus Interest on Capital 2,20,000 4,40,000 6,60,000
E. Less: Interest on Capital (D × 10/110) 20,000 40,000 60,000
F. Opening Capital 2,00,000 4,00,000 6,00,000

2. STATEMENT SHOWING REQUIRED ADJUSTMENT
Particulars X‘s Capital A/c Y‘s Capital A/c Z’s Capital A/c Firm
Dr. (`) Cr. (`) Dr. (`) Cr. (`) Dr. (`) Cr. (`) Dr. (`) Cr. (`)

I. Amount already credited,
now taken back:
Interest on Capital @ 10% 20,000 ... 40,000 ... 60,000 ... ... 1,20,000
Share of Profit (4 : 1 : 1) 80,000 ... 20,000 ... 20,000 ... ... 1,20,000
II. Amount which should
have been credited:
Interest on Capital @ 12% ... 24,000 ... 48,000 ... 72,000 1,44,000 ...
Share of Profit ` 96,000
(i.e., ` 2,40,000 – ` 1,44,000)
in ratio of 1 : 1 : 1 ... 32,000 ... 32,000 ... 32,000 96,000 ...
1,00,000 56,000 60,000 80,000 80,000 1,04,000 2,40,000 2,40,000
III. Net Effect 44,000 (Dr.) 20,000 (Cr.) 24,000 (Cr.) ...

(b) JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
2020
March 31 Profit and Loss Appropriation A/c ...Dr. 1,52,000
To Vrindan’s Capital A/c 68,000
To Kundan’s Capital A/c 34,000
To Srijan’s Capital A/c 50,000
(Being the distribution of profit among partners)