Piya, Bina and Sona were partners sharing profits in the ratio of 2 : 1 : 1.Piya withdrew ` 3,000 every month and Bina withdrew ` 4,000 everymonth. Interest on drawings @ 6% was to be charged as per partnershipdeed but it was not considered while preparing final accounts.Showing your working clearly, pass the necessary adjustment entry torectify the error.
Question
Piya, Bina and Sona were partners sharing profits in the ratio of 2 : 1 : 1.Piya withdrew 3,000 every month and Bina withdrew 4,000 everymonth. Interest on drawings @ 6% was to be charged as per partnershipdeed but it was not considered while preparing final accounts.Showing your working clearly, pass the necessary adjustment entry torectify the error.
Solution
First, we need to calculate the interest on drawings for Piya and Bina.
For Piya: She withdrew 3,000 every month. So, the average period of her drawings will be 6.5 months (since it's uniformly distributed over the year). Interest on Drawings = Drawings * Rate * Time = 3,000 * 12 * 6% * 6.5 / 12 = 1,170
For Bina: She withdrew 4,000 every month. So, the average period of her drawings will also be 6.5 months. Interest on Drawings = Drawings * Rate * Time = 4,000 * 12 * 6% * 6.5 / 12 = 1,560
The total interest on drawings is 1,170 (Piya) + 1,560 (Bina) = 2,730
The adjustment entry to rectify the error would be:
Interest on Drawings Account Dr. 2,730 To Piya's Capital Account 1,170 To Bina's Capital Account 1,560
This entry debits the Interest on Drawings account and credits the capital accounts of Piya and Bina, thereby charging them for the interest on their drawings.
Similar Questions
Q 18. The partners of a firm distributed the profits for the year ended 31st March, 2019, ₹90,000 in theratio of 3:2:1 without providing for the following adjustments:(i) A and B were entitled to a salary of 1,500 each per annum.(ii) B was entitled to a commission of 4,500.(iii) B and C had guaranteed a minimum profit of 35,000 p.a. to A.(iv) Profits were to be shared in the ratio of 3:3:2.Pass necessary journal entry for the above adjustments in the boo
On 31st March , 2014 Balances in the capital Accounts Of Eleen Monu And Ahmad after making adjustments for profits and drawings were Rs. 1,60,000 Rs. 1,20,000 and Rs, 80,000 respectively . Subsequently ,it was Discovered that the interest on capital and drawings had been omitted . (i) Profit for the year ended 31st March ,2014 was Rs. 40,000. (ii) During the year Eleen Monu And Monu Each withdrew a total sum Of Rs . 24,000 in equal instalments in the begining of each month and ahmad withdrew a total sum of Rs. 48,000 in equal instalments at the end months . (iii) the interest on drawings was to be chaged @ 5% p.a and interest on capital was to be allowed @ 10% p.a (iv) THe profit- sharing ratio among the partners was 2:1:1. Showinng your working notes clearly , pass the necessary rectifying entry
werIn a partnership business, Q’s capital was half of P’s if after 8 months,Q withdrew half of his capital and after 2 months more P withdrew 1/4th of his capital, then the profit ratio of P and Q after 1 year will beOptions7 : 27 : 59 : 2323 : 10
Seema started a business investing 20,000. After six months, Heema joined her with 75,000. After another six months, Neema also joined them with 50,000. What should be the ratio in which the profits are shared by the 3 persons respectively at the end of 2 years?Options14 : 35 : 1016 : 45 : 2016 : 30 : 1818 : 19 : 20
Read the following hypothetical situation and answer question no. 9 and 10.Ana and Anne started a partnership business on 1st April, 2022. Their capital contributions wereRs. 3, 00,000 and Rs. 1, 00,000 respectively. Ana rented her property to carry on business forRs.2, 500 p.m. Interest on capitals @12% p.a. Ana, to get a salary of Rs. 4,000 p.m. Anne to geta commission of 2% of the net profit. Profits are to be shared in the ratio of 3:2. The profits forthe year ended 31st March, 2023 before providing for rent was Rs. 2, 00,000.Dr. Profit and Loss Appropriation Account Cr.for the year ended 31st March, 2023Particulars Rs. Particulars Rs.To Interest on capital:AnaAnneTo Partner’s Salary:AnaTo Anne’s commissionTo Profit transferred toAna’s Capital A/cAnne’s Capital A/c______________48,000_______(1)______________By Profit and Loss A/c _______(2)_______ _______9. The amount to be reflected in blank (1) will be:(a) Rs.3,720(b) Rs.3,400(c) Rs. 2,800(d) Rs.2,94010. The amount to be reflected in blank (2) will be:(a) Rs.1,62,000(b) Rs. 1,74,500(c) Rs. 1,71,400(d) Rs.1,70,000
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.