This document provides a summary and solution to an accounting problem involving the distribution of partnership profits among three partners (Alia, Bhanu, and Chand). Several adjustments needed to be made to the initial profit distribution of Rs. 80,000 in a 3:3:2 ratio, including salaries of Rs. 1,500 per month for Alia and Chand, a commission of Rs. 4,000 for Bhanu, and a guaranteed minimum annual profit of Rs. 35,000 for Alia with any deficiency borne equally by Bhanu and Chand. The solution shows the adjustment calculations and journal entry to correctly allocate the profits among the partner capital accounts after considering these adjustments. The net effect is an increase of Rs.

1. ACCOUNTANCY
CLASS-XII
SOLUTION WITH EXPLANATION
By Geeta Handa
BOOK : Double Entry Book Keeping
T.S.GREWAL’S
Accounting For Partnership- Fundamentals
Q 90: Partners : Alia ,Bhanu and Chand
Geeta Handa

2. Geeta Handa
PGT Accountancy
• 20 years experience of teaching
accountancy.
• 14 years experience of checking
accountancy papers of CBSE
• Worked as examiner for conducting
practical exam of accountancy.
geet7handa@gmail.com Geeta Handa

3. Q 90 The partners of a firm, Alia, Bhanu and Chand distributed the profits
for the year ended 31st March, 2017, Rs.80,000 in the ratio 3 : 3 : 2 without
providing for the following adjustments :
(a) Alia and Chand were entitled to a salary of Rs.1,500 each per month.
(b) Bhanu was entitled for a commission of Rs.4,000.
(c) Bhanu and Chand had guaranteed a minimum profit of Rs.35,000 p.a.to
Alia any deficiency to borne equally by Bhanu and Chand.
Pass the necessary Journal entry for the above adjustments in the books of
the firm. Show workings clearly.
Geeta Handa

4. Past Adjustment with Guarantee of Profit
Q 90 The partners of a firm, Alia, Bhanu and Chand distributed the profits
for the year ended 31st March, 2017, Rs.80,000 in the ratio 3 : 3 : 2 without
providing for the following adjustments :
(a) Alia and Chand were entitled to a salary of Rs.1,500 each per month.
(b) Bhanu was entitled for a commission of Rs.4,000.
(c) Bhanu and Chand had guaranteed a minimum profit of Rs.35,000 p.a.to
Alia any deficiency to borne equally by Bhanu and Chand.
Pass the necessary Journal entry for the above adjustments in the books of
the firm. Show workings clearly.
Geeta Handa

5. Salary of Alia : 1,500 per month
= 1,500 x 12
= 18,000
Salary of Chand : 1,500 per month
= 1,500 x 12
= 18,000
Geeta Handa

6. Adjustment Table
Particulars Alia’s Capital A/c
Dr. Cr.
Bhanu’s Capital A/c
Dr. Cr.
Chand’s Capital A/c
Dr. Cr.
Firm
Dr. Cr.
Wrong Profit
(3 : 3 : 2)
30,000 -------- 30,000 ------ 20,000 ------ ------- 80,000
Geeta Handa

7. Adjustment Table
Particulars Alia’s Capital A/c
Dr. Cr.
Bhanu’s Capital A/c
Dr. Cr.
Chand’s Capital A/c
Dr. Cr.
Firm
Dr. Cr.
Wrong Profit
(3 : 3 : 2)
30,000 -------- 30,000 ------ 20,000 ------ ------- 80,000
Partners
Salary
------- 18,000 ------ ------ ------- 18,000 36,000
Geeta Handa

8. Adjustment Table
Particulars Alia’s Capital A/c
Dr. Cr.
Bhanu’s Capital A/c
Dr. Cr.
Chand’s Capital A/c
Dr. Cr.
Firm
Dr. Cr.
Wrong Profit
(3 : 3 : 2)
30,000 -------- 30,000 ------ 20,000 ------ ------- 80,000
Partners
Salary
------- 18,000 ------ ------ ------- 18,000 36,000
Partners
commission
------ ------ ------ 4,000 ------ ------ 4,000
Geeta Handa

9. Adjustment Table
Particulars Alia’s Capital A/c
Dr. Cr.
Bhanu’s Capital A/c
Dr. Cr.
Chand’s Capital A/c
Dr. Cr.
Firm
Dr. Cr.
Wrong Profit
(3 : 3 : 2)
30,000 -------- 30,000 ------ 20,000 ------ ------- 80,000
Partners Salary ------- 18,000 ------ ------ ------- 18,000 36,000
Partners
commission
------ ------ ------ 4,000 ------ ------ 4,000
Difference
(Balance Amt)
40,000
80,000 80,000
Geeta Handa

10. Workings Note :-
Partners Alia Bhanu Chand
Profit Sharing Ratio 3 : 3 : 2
Share of Profit 40,000 x
3
8
40,000 x
3
8
40,000 x
2
8
= 15,000 = 15,000 = 10,000
Geeta Handa

11. Workings Note :-
Alia’s Share of Profit = Rs.15,000
Profit Guaranteed to Alia = Rs.35,000
Deficiency of Profit = 35,000 – 15,000 = Rs.20,000
Deficiency to be borne equally by Bhanu and Chand = 20,000 x
1
2
= Rs.10,000 each
Geeta Handa

12. Workings Note :-
Partners Alia Bhanu Chand
Profit Sharing Ratio 3 : 3 : 2
Share of Profit 40,000 x
3
8
40,000 x
3
8
40,000 x
2
8
= 15,000 = 15,000 = 10,000
Deficiency + 20,000 (10,000) (10,000)
Profit Transferred to Capital A/C 35,000 5,000 --------
Geeta Handa

13. Adjustment Table
Particulars Alia’s Capital A/c
Dr. Cr.
Bhanu’s Capital A/c
Dr. Cr.
Chand’s Capital A/c
Dr. Cr.
Firm
Dr. Cr.
Wrong Profit
(3 : 3 : 2)
30,000 -------- 30,000 ------ 20,000 ------ ------- 80,000
Partners Salary ------- 18,000 ------ ------ ------- 18,000 36,000
Partners
commission
------ ------ ------ 4,000 ------ ------ 4,000
Profit Transferred
to Capital A/C
------ 35,000 ------ 10,000 -------- ------- 40,000
80,000 80,000
Geeta Handa

14. Adjustment Table
Particulars Alia’s Capital A/c
Dr. Cr.
Bhanu’s Capital A/c
Dr. Cr.
Chand’s Capital A/c
Dr. Cr.
Firm
Dr. Cr.
Wrong Profit
(3 : 3 : 2)
30,000 -------- 30,000 ------ 20,000 ------ ------- 80,000
Partners Salary ------- 18,000 ------ ------ ------- 18,000 36,000
Partners
commission
------ ------ ------ 4,000 ------ ------ 4,000
Profit Transferred
to Capital A/C
------ 35,000 ------ 5,000 -------- ------- 40,000
Total 30,000 53,000 30,000 9,000 20,000 18,000 80,000 80,000
Geeta Handa

15. Adjustment Table
Particulars Alia’s Capital A/c
Dr. Cr.
Bhanu’s Capital A/c
Dr. Cr.
Chand’s Capital A/c
Dr. Cr.
Firm
Dr. Cr.
Wrong Profit
(3 : 3 : 2)
30,000 -------- 30,000 ------ 20,000 ------ ------- 80,000
Partners Salary ------- 18,000 ------ ------ ------- 18,000 36,000
Partners
commission
------ ------ ------ 4,000 ------ ------ 4,000
Profit Transferred
to Capital A/C
------ 35,000 ------ 5,000 -------- ------- 40,000
Total 30,000 53,000 30,000 9,000 20,000 18,000 80,000 80,000
Net Effect/ Excess 23,000
Cr.
21,000
Dr.
2,000
Dr.
Geeta Handa

16. Adjustment Entry
Date Particulars L.F Dr. (Rs.) Cr. (Rs.)
Bhanu’s Capital A/c Dr.
Chand’s Capital A/c Dr.
To Alia’s Capital A/c
(Being the adjustment entry
passed for omissions )
21,000
2,000
23,000
Geeta Handa

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