Question

On 31 St December 2014 after the close of the accounts, the capital accounts of Kapil, Rajat and Vishal stood in the books of the firm at Rs. 40,000; Rs. 30,000; and Rs. 20,000 respectively. It was subsequently discovered that interest at 5% p.a. on partnerscapitals at the beginning of the year and interest on drawings of partners were left out of considerations. The interest on drawings amounted to Kapil Rs. 250; RajatRs. 180; Vishal Rs.100. The profit for the year in arriving at the above figures of capitals amounted to Rs. 60,000 and partners drawings had been Kapil Rs, 10.000; Rajat Rs.7, 500 and Vishal Rs.4, 500. The partners shared profit and losses as Kapil one half, Rajat one-third and Vishal one sixth respectively. You are required to give the necessary journal entry to rectify the above omissions:

Answer 1

Calculation of Opening Capitals

| Particulars | Kapil Rs. | Rajat Rs. | Vishal Rs. |
| Capital (31st December 2014) | 40,000 | 30,000 | 20,000 |
| Add: Drawings | 10,000 | 7,500 | 4,500 |
| | 50,000 | 37,500 | 24,500 |
| Less: Profit already credited | 30,000 | 20,000 | 10,000 |
| Capital (1st January 2014) | 20,000 | 17,500 | 14,500 |

Adjustment of Capitals

Adjustment Entry should therefore be:

| Kapil’ Capital A/c Dr. | 285 |
| To Rajat’ Capital A/c | 5 |
| To Vishal’* Capital A/c | 280 |