A, B and C were partners sharing profits and losses equally. Their respective fixed capitals were $ 30,000, $ 20,000 and $ 10,000. After closing the accounts for the year 2014 it was discovered that the interest on capital at the rate 10% p.a. was omitted before distributing the profits. The profits for the year 2014 were $ 9,000. Instead of changing the audited balance sheet it was decided to pass a single adjusting entry in the beginning of the year, so that the accounts of the previous years can be rectified. Show the Journal Entries and provide working note.

A, B and C were partners sharing profits and losses equally. Their respective fixed capitals were $ 30,000, $ 20,000 and $ 10,000. After closing the accounts for the year 2014 it was discovered that the interest on capital at the rate 10% p.a. was omitted before distributing the profits. The profits for the year 2014 were $ 9,000. Instead of changing the audited balance sheet it was decided to pass a single adjusting entry in the beginning of the year, so that the accounts of the previous years can be rectified. Show the Journal Entries and provide working note.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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