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A b and c were partners in a firm on 1.4.2014. their capitals stood at 50000 25000 and 25000 respectively. as per the provisions of the partnership deed: c was entitled for salary of 5000 p.a. partners were entitled to interest on capital at 5% p.a. profits were to be shared in the ratio of parents capital the net profit for the yeary2014-15 was 33000 which was divided equally without providing for the above terms pass an adjustment entry in journal to rectify the above error?
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A b and c were partners in a firm on 1.4.2014. their capitals stood at...
Adjustment Entry to Rectify Partnership Error
To rectify the error made in the division of profits without considering the provisions of the partnership deed, the following adjustment entry should be recorded in the journal:
Date: 31st March 2015
Particulars | Debit | Credit
Profit & Loss A/c | 5000 |
B's Capital A/c | 1250 |
C's Capital A/c | 1250 |
(To record interest on capital and salary payable)
Profit & Loss A/c | 15500 |
A's Capital A/c | 7750 |
B's Capital A/c | 3875 |
C's Capital A/c | 3875 |
(To adjust the profits according to the partnership deed)
Explanation:
The above adjustment entry consists of two parts:
1. Interest on Capital and Salary Payable
As per the partnership deed, C was entitled to a salary of 5000 p.a., and all partners were entitled to interest on their capital at 5% p.a. Therefore, interest on capital and salary payable to C should be recorded in the books of accounts. The following amounts should be debited and credited:
- Debit Profit & Loss A/c with 5000 (to record salary payable to C)
- Debit B's Capital A/c with 1250 (to record interest on B's capital at 5%)
- Credit C's Capital A/c with 1250 (to record interest on C's capital at 5%)
2. Adjustment of Profits
As per the partnership deed, profits were to be shared in the ratio of partners' capital. Therefore, profits should be adjusted according to the partnership deed. The following amounts should be debited and credited:
- Debit Profit & Loss A/c with 15500 (to adjust the profits)
- Credit A's Capital A/c with 7750 (to record A's share of profits)
- Credit B's Capital A/c with 3875 (to record B's share of profits)
- Credit C's Capital A/c with 3875 (to record C's share of profits)
By recording the above adjustment entry, the error made in the division of profits without considering the provisions of the partnership deed can be rectified.
To rectify the error made in the division of profits without considering the provisions of the partnership deed, the following adjustment entry should be recorded in the journal:
Date: 31st March 2015
Particulars | Debit | Credit
Profit & Loss A/c | 5000 |
B's Capital A/c | 1250 |
C's Capital A/c | 1250 |
(To record interest on capital and salary payable)
Profit & Loss A/c | 15500 |
A's Capital A/c | 7750 |
B's Capital A/c | 3875 |
C's Capital A/c | 3875 |
(To adjust the profits according to the partnership deed)
Explanation:
The above adjustment entry consists of two parts:
1. Interest on Capital and Salary Payable
As per the partnership deed, C was entitled to a salary of 5000 p.a., and all partners were entitled to interest on their capital at 5% p.a. Therefore, interest on capital and salary payable to C should be recorded in the books of accounts. The following amounts should be debited and credited:
- Debit Profit & Loss A/c with 5000 (to record salary payable to C)
- Debit B's Capital A/c with 1250 (to record interest on B's capital at 5%)
- Credit C's Capital A/c with 1250 (to record interest on C's capital at 5%)
2. Adjustment of Profits
As per the partnership deed, profits were to be shared in the ratio of partners' capital. Therefore, profits should be adjusted according to the partnership deed. The following amounts should be debited and credited:
- Debit Profit & Loss A/c with 15500 (to adjust the profits)
- Credit A's Capital A/c with 7750 (to record A's share of profits)
- Credit B's Capital A/c with 3875 (to record B's share of profits)
- Credit C's Capital A/c with 3875 (to record C's share of profits)
By recording the above adjustment entry, the error made in the division of profits without considering the provisions of the partnership deed can be rectified.
Community Answer
A b and c were partners in a firm on 1.4.2014. their capitals stood at...
(A)int on capital -cr
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A b and c were partners in a firm on 1.4.2014. their capitals stood at 50000 25000 and 25000 respectively. as per the provisions of the partnership deed: c was entitled for salary of 5000 p.a. partners were entitled to interest on capital at 5% p.a. profits were to be shared in the ratio of parents capital the net profit for the yeary2014-15 was 33000 which was divided equally without providing for the above terms pass an adjustment entry in journal to rectify the above error? please reply as soon as possible?
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A b and c were partners in a firm on 1.4.2014. their capitals stood at 50000 25000 and 25000 respectively. as per the provisions of the partnership deed: c was entitled for salary of 5000 p.a. partners were entitled to interest on capital at 5% p.a. profits were to be shared in the ratio of parents capital the net profit for the yeary2014-15 was 33000 which was divided equally without providing for the above terms pass an adjustment entry in journal to rectify the above error? please reply as soon as possible? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A b and c were partners in a firm on 1.4.2014. their capitals stood at 50000 25000 and 25000 respectively. as per the provisions of the partnership deed: c was entitled for salary of 5000 p.a. partners were entitled to interest on capital at 5% p.a. profits were to be shared in the ratio of parents capital the net profit for the yeary2014-15 was 33000 which was divided equally without providing for the above terms pass an adjustment entry in journal to rectify the above error? please reply as soon as possible? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A b and c were partners in a firm on 1.4.2014. their capitals stood at 50000 25000 and 25000 respectively. as per the provisions of the partnership deed: c was entitled for salary of 5000 p.a. partners were entitled to interest on capital at 5% p.a. profits were to be shared in the ratio of parents capital the net profit for the yeary2014-15 was 33000 which was divided equally without providing for the above terms pass an adjustment entry in journal to rectify the above error? please reply as soon as possible?.
A b and c were partners in a firm on 1.4.2014. their capitals stood at 50000 25000 and 25000 respectively. as per the provisions of the partnership deed: c was entitled for salary of 5000 p.a. partners were entitled to interest on capital at 5% p.a. profits were to be shared in the ratio of parents capital the net profit for the yeary2014-15 was 33000 which was divided equally without providing for the above terms pass an adjustment entry in journal to rectify the above error? please reply as soon as possible? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A b and c were partners in a firm on 1.4.2014. their capitals stood at 50000 25000 and 25000 respectively. as per the provisions of the partnership deed: c was entitled for salary of 5000 p.a. partners were entitled to interest on capital at 5% p.a. profits were to be shared in the ratio of parents capital the net profit for the yeary2014-15 was 33000 which was divided equally without providing for the above terms pass an adjustment entry in journal to rectify the above error? please reply as soon as possible? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A b and c were partners in a firm on 1.4.2014. their capitals stood at 50000 25000 and 25000 respectively. as per the provisions of the partnership deed: c was entitled for salary of 5000 p.a. partners were entitled to interest on capital at 5% p.a. profits were to be shared in the ratio of parents capital the net profit for the yeary2014-15 was 33000 which was divided equally without providing for the above terms pass an adjustment entry in journal to rectify the above error? please reply as soon as possible?.
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ample number of questions to practice A b and c were partners in a firm on 1.4.2014. their capitals stood at 50000 25000 and 25000 respectively. as per the provisions of the partnership deed: c was entitled for salary of 5000 p.a. partners were entitled to interest on capital at 5% p.a. profits were to be shared in the ratio of parents capital the net profit for the yeary2014-15 was 33000 which was divided equally without providing for the above terms pass an adjustment entry in journal to rectify the above error? please reply as soon as possible? tests, examples and also practice Commerce tests.
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