question_answer

A, B and C shared profits in the ratio of 3 : 2: 1. The profits of the last three years were Rs. 70,000, Rs. 42,000 and Rs. 53,000 respectively. These profits were by mistake, shared equally for all the three years. It is now decided to correct the error. Pass necessary journal entry for the same.

Answer:

                                                            Adjusting Journal Entry

Date	Particulars		LF	Amt (Dr)	Amt (Cr)
	C?s Capital A/c	Dr		27,500
	To A?s Capital A/c				27,500
	(Being the adjustment made for profit divided in wrong ratio)

Adjustment Table

	Particulars	A (Rs.)	B (Rs.)	C (Rs.)
I.	Amount Already Recorded (1,65,000 in 1 : 1 : 1)	55,000	55,000	55,000
II.	Amount which should have been Recorded (1,65,000 in 3 : 2 : 1)	82,500	55,000	27,500
	Difference (I ? II)	27,500 (Cr)	-	27,500 (Dr)

Working Note             Profit = 70,000 + 42,000 + 53,000 = Rs. 1,65,000