Adjustments

The ratio applicable to the period of profit must be used. Dates and periods are decisive in expert questions.

Interest on drawings increases profit by (₹5000) and is shared (3:2). A pays (₹5000) but gets (₹3000) back so A's net loss is (₹2000).

The capital of ₹1,20,000 introduced on 1 April remained invested for the full 12 months, so its interest is ₹1,20,000 × 10% = ₹12,000. The additional capital of ₹30,000 introduced on 1 January remained invested for only 3 months, so its interest is ₹30,000 × 10% × 3/12 = ₹750. Therefore, total interest is ₹12,000 + ₹750 = ₹12,750. ₹15,000 is incorrect because the additional capital cannot earn interest for the full year. Exam tip: whenever capital changes during the year, calculate interest on each amount according to its actual period of use.

For equal drawings in the middle of each quarter the average period is (6) months. Interest is (24000 \times 8% \times \frac{6}{12}=₹960).

Opening capital is found by subtracting interest and adding drawings to closing capital. (90000-6000+10000=₹94000).

Partner's personal expense is drawings so the partner's account is debited. It is not treated as a business expense of the firm.

The firm owes the partner so the partner's account is credited. This is the opposite of personal expense treatment.

Interest on capital is allowed to partners so it is debited. Interest on drawings is charged from partners so it is credited.

B's normal share is (₹36000) and deficiency is (₹9000). A's normal share (₹84000) becomes (₹75000).

The deed specifically states capital ratio so that ratio applies. In guarantee questions the deficiency bearing ratio may differ from profit ratio.

Wrong shares are (₹60000) and (₹36000) while correct shares are (₹72000) and (₹24000). The first partner needs credit of (₹12000).

Commission on sales is not based on profit so it may be an expense. Commission on profit is treated as appropriation.

Interest on partner's loan is a liability of the firm. It is treated as expense whether there is profit or loss.

When deed is silent the rate is (6%) and period is (9) months. Interest is (50000 \times 6% \times \frac{9}{12}=₹2250).

If the question gives the rate and instruction it is used as the basis. Do not ignore information given in the exam.

For irregular drawings interest on each withdrawal according to its date is most accurate. Average period is useful only for equal regular drawings.

An adjustment entry must have equal debit and credit. If only these two partners are involved the data is incomplete and balance needs a proper account.

Correct interest is A (₹10000) and B (₹20000) then remaining (₹30000) is shared equally. Correct totals are A (₹25000) and B (₹35000) so A transfers (₹5000) to B.

A's commission is (₹10000) and remaining (₹40000) is shared (3:2). B's share is (40000 \times \frac{2}{5}=₹16000).

Since the profit before commission is ₹90,000, B’s commission is 10% × ₹90,000 = ₹9,000. A’s salary is ₹18,000. Therefore, residual profit = ₹90,000 − ₹18,000 − ₹9,000 = ₹63,000. ₹72,000 would result from deducting only the salary and ignoring the commission. In the exam, apply ‘commission before charging commission’ directly to the given profit.

Commission (=\frac{15}{115}\times 230000=₹30000). For commission after charging use rate over (100+)rate.

For equal monthly withdrawals in the middle the average period is (6) months. Interest is (48000 \times 9% \times \frac{6}{12}=₹2160).

When withdrawals are made in the middle of each month the average period is (6) months. It differs from beginning and end methods.

The periods are (11), (7) and (2) months. Interest is (15000\times12%\times\frac{11}{12}+25000\times12%\times\frac{7}{12}+10000\times12%\times\frac{2}{12}=₹2700).

Correctly A gets salary (₹36000) and half of remaining (₹48000), that is (₹24000). A should get (₹60000) so (₹18000) comes from B.