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M.394 An Aid to Accountancy—CBSE XII

12. In the Books of Firm
ADJUSTMENT JOURNAL ENTRY
Date Particulars L.F. Dr. (`) Cr. (`)
Z’s Capital A/c ...Dr. 550
To X’s Capital A/c 550
(Being the adjustment entry recorded due to omission of interest
on Capital and Drawings )

Working Notes:
1. CALCULATION OF OPENING CAPITAL AND INTEREST ON CAPITAL
Particulars X Y Z
` ` `
A. Closing Capital 30,000 25,000 20,000
B. Add: Drawings 5,000 4,000 3,000
C. Less: Share of Profit already Credited (8,000) (8,000) (8,000)
D. Opening Capital 27,000 21,000 15,000
E. Interest on capital @ 10% p.a. 2,700 2,100 1,500
2. Calculation of Revised Profits:
Revised Profits = Given Profits + Interest on Drawings* – Interest on Capitals
= ` 24,000 + (` 250 + ` 200 + ` 150) – (` 2,700 + ` 2,100 + ` 1,500) = ` 18,300
*Date of Drawings are not given so interest is to be charged at an agreed rate for 6 months.
Hence, Interest on Drawings: X—` 250; Y—` 200; Z—` 150.

3. STATEMENT SHOWING THE REQUIRED ADJUSTMENT
Particulars X Y Z
` ` `
I. Amount already credited; now debited (Dr.) 8,000 8,000 8,000
II. Net Amount which should have been credited:
Interest on Capital (Cr.) 2,700 2,100 1,500
Share of Profit (` 18,300 in 1 : 1 : 1) (Cr.) 6,100 6,100 6,100
Interest on Drawings (Dr.) (250) (200) (150)
(Cr.) 8,550 8,000 7,450
III. Amount to be adjusted (I – II) 550 ... 550
(Cr.) (Dr.)

13. (a) JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
Revaluation A/c ...Dr. 54,000
To Stock A/c (` 60,000 × 40/100) 24,000
To Furniture A/c (` 50,000 × 60%) 30,000
(Being the decrease in value of assets recorded)
Rita’s Capital A/c ...Dr. 27,000
Geeta’s Capital A/c ...Dr. 16,200
Ashish’s Capital A/c ...Dr. 10,800
To Revaluation A/c 54,000
(Being the Loss on Revaluation transferred to Partners’ Capital Accounts
in their old ratio)