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16. Neena and Sara were partners …

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16. Neena and Sara were partners in a firm with fixed capitals of Rs. 5,00,000 and Rs. 4,00,000 respectively. It was discovered that interest on capital @ 6% pa was credited to the partners for the two years ending 31st March, 2018 and 31st March, 2019 where as there was no such provision in the partnership deed. Their profit sharing ratio during the last two years was: 2017-18 4:5 Showing your workings clearly, pass the necessary adjustment entry to rectify the error.

Posted by Surabhi Jain 1 year, 10 months ago

CBSE > Class 12 > Accountancy

1 answers

Preeti Dabral 1 year, 10 months ago

JOURNAL

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Sara’s Current A/c ... Dr.		9,000
	To Neena’s Current A/c			9,000
	(Interest on Capital wrongly credited, now rectified)

Working Note:
Table showing adjustments

Partners	Interest on capital Dr. (₹) 2017-18	Profits 4:5 Cr. 2017-18(₹)	Interest on capital Dr. (₹)2018-19	Profits 5:1 2018-19Cr. (₹)	Net Effect
Dr. (₹)	Cr. (₹)
Neena	30,000	24,000	30,000	45,000	-	9,000
Sara	24,000	30,000	24,000	9,000	9,000	-
	54,000	54,000	54,000	54,000	9,000	9,000

Interest on capital:
Neena = 5,00,000 {tex}\times{/tex} 6% = 30,000 for one year
Sara = 4,00,000 {tex}\times{/tex} 6% = 24,000 for one year

ANSWER

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