On 31st March 2018, the balances in the Capital Accounts of Abhir, Bobby, and Vineet, after making adjustments for profits and drawings were ₹ 8,00,000, ₹ 6,00,000, and ₹ 4,00,000 respectively.

Subsequently, it was discovered that interest on capital and interest on drawings had been mitted. The partners were entitled to interest on capital @ 10% p.a. and were to be charged interest on drawings @ 6% p.a. The drawings during the year were: Abhir – ₹ 20,000 drawn at the end of each month, Bobby – ₹ 50,000 drawn at the beginning of every half year, and Vineet – ₹ 1,00,000 withdrawn on 31st October 2017. The net profit for the year ended 31st March 2018 was ₹ 1,50,000. The profit-sharing ratio was 2 : 2 : 1.

Pass necessary adjusting entries for the above adjustments in the books of the firm. Also, show your workings clearly.

Anurag Pathak Changed status to publish April 11, 2024
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