Arup, Swarup and Roop are partners in a firm. On 1st April 2024 their fixed capital stood at 50,000,25,000 and - 25,000 respectively. As per the…

CA Foundation · Accounting · MTP · May 2026
Arup, Swarup and Roop are partners in a firm. On 1st April 2024 their fixed capital stood at 50,000,25,000 and - 25,000 respectively. As per the provision of partnership deed: (1) Roop was entitled for a salary of 5,000 p.a. (2) All the partners were entitled to interest on capital at 5% p.a. (3) Profits and losses were to be shared in the ratio of Capitals of the partners. Net Profit for the year ended 31st March, 2025 of 33,000 and 31st March, 2026 of 45,000 was divided equally without providing for the above adjustments. You are required to pass an adjustment journal entry to rectify the above errors .

Suggested Answer and Working Notes:

Particulars Arup Swarup Roop Total Profit of firm I. Amount already credited: Share of profit (in the ratio of 1:1:1) (2024-25, 2025-26) 26,000 26,000 26,000 78,000 II. Amount which should have been credited: Roop’s Salary (2024-25, 2025-26) 10,000 10,000 Interest on Capital (2024-25, 2025-26) 5,000 2,500 2,500 10,000 Share of Profit 29,000 14,500 14,500 58,000 34,000 17,000 27,000 Net effect (I - II) (8,000) 9,000 (1,000) - The necessary journal entry will be: Particulars Debit (₹) Credit (₹) Swarup’s Current A/c 9,000 To Arup’s Current A/c 8,000 To Roop’s Current A/c 1,000 (Salary to Roop, Interest on capital charged and profit shared among partners in the ratio of capital)

Topics: Introduction to Partnership Accounts

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