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M.90 An Aid to Accountancy—CBSE XII

11. ADJUSTMENT ENTRY
Date Particulars L.F. Dr. (`) Cr. (`)
A’s Current A/c ...Dr. 5,640
To B’s Current A/c 4,860
To C’s Current A/c 780
(Being the adjustment entry passed)

Working Notes:
1. It is presumed that capital of the partners are fixed. As a result, interest on capitals has been calculated on the given
balances of capital.

ADJUSTMENT TABLE
Particulars A’s Current A/c B’s Current A/c C’s Current A/c Firm
Dr. (`) Cr. (`) Dr. (`) Cr. (`) Dr. (`) Cr. (`) Dr. (`) Cr. (`)
Profit already wrongly distributed
(3 : 2 : 1), now taken back 15,000 ... 10,000 ... 5,000 ... ... 30,000
Profit as should be distributed:
Interest on Capital ... 1,500 ... 1,000 ... 500 3,000 ...
Salary ... ... ... 6,000 ... ... 6,000 ...
Commission (WN 2) ... ... ... ... ... 1,350 1,350 ...
Net Profit Distributed (2 : 2 : 1) ... 7,860 ... 7,860 ... 3,930 19,650 ...
15,000 9,360 10,000 14,860 5,000 5,780 30,000 30,000
Balance to be Adjusted (Net Effect) 5,640 (Dr.) 4,860 (Cr.) 780 (Cr.) Nil

2. Calculation of Commission to C: `
Net Profit 30,000
Less: Interest on Capital (` 1,500 + ` 1,000 + ` 500) 3,000
Profit after charging Interest on Capital 27,000
C’s Commission = ` 27,000 × 5/100 = ` 1,350.
12. JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
(i) Realisation A/c ...Dr. 1,00,000
To Sundry Assets A/c 1,00,000
(Being the assets transferred to Realisation Account)
(ii) Atul’s Capital A/c [(50% of ` 1,00,000) – 20%] ...Dr. 40,000
To Realisation A/c 40,000
(Being 50% of assets worth ` 50,000 taken over by Atul at 20% discount)

(iii) Bank A/c [(40% of ` 50,000) + 30%] ...Dr. 26,000
To Realisation A/c 26,000
(Being 40% of remaining assets sold at a profit of 30%)
(iv) No Entry will be passed for 5% of remaining assets being obsolete and remaining assets handed over to a creditor
in full settlement.