Answer :
To pass the necessary adjustment entry for the omission of interest on capital, follow these steps:
### Working Notes:
1. **Calculate the Opening Capitals:**
Given that the closing capitals on 31st March 2020, after adjusting for profit and drawings, are:
- K: ₹3,00,000
- L: ₹2,00,000
- M: ₹1,00,000
The drawings are:
- K: ₹20,000
- L: ₹15,000
- M: ₹5,000
The profit for the year is ₹1,80,000. Let’s assume profits are shared equally among partners (since the profit-sharing ratio is not specified).
Therefore, profit share for each partner:
- K: ₹60,000
- L: ₹60,000
- M: ₹60,000
Now, calculate the opening capital by reversing the adjustments for drawings and profit:
For K:
\[
\text{Closing Capital} = \text{Opening Capital} + \text{Profit} - \text{Drawings}
\]
\[
3,00,000 = \text{Opening Capital} + 60,000 - 20,000
\]
\[
\text{Opening Capital} = 3,00,000 - 60,000 + 20,000 = 2,60,000
\]
For L:
\[
2,00,000 = \text{Opening Capital} + 60,000 - 15,000
\]
\[
\text{Opening Capital} = 2,00,000 - 60,000 + 15,000 = 1,55,000
\]
For M:
\[
1,00,000 = \text{Opening Capital} + 60,000 - 5,000
\]
\[
\text{Opening Capital} = 1,00,000 - 60,000 + 5,000 = 45,000
\]
2. **Calculate Interest on Capital:**
Interest on Capital is 6% p.a. on the opening capital.
For K:
\[
\text{Interest} = 2,60,000 \times 0.06 = 15,600
\]
For L:
\[
\text{Interest} = 1,55,000 \times 0.06 = 9,300
\]
For M:
\[
\text{Interest} = 45,000 \times 0.06 = 2,700
\]
3. **Adjust the Omission:**
Total Interest on Capital:
\[
15,600 + 9,300 + 2,700 = 27,600
\]
This amount should be deducted from the profit and credited to the partners' capital accounts in proportion to their interest on capital.
The revised profit:
\[
1,80,000 - 27,600 = 1,52,400
\]
Profit per partner:
\[
1,52,400 / 3 = 50,800
\]
Now adjust the omission by comparing the interest on capital received with the revised profit share:
For K:
\[
\text{Interest} = 15,600
\]
\[
\text{Revised Profit Share} = 50,800
\]
\[
\text{Adjustment} = 15,600 - 60,000 = 6,400
\]
For L:
\[
\text{Interest} = 9,300
\]
\[
\text{Revised Profit Share} = 50,800
\]
\[
\text{Adjustment} = 9,300 - 60,000 = 100
\]
For M:
\[
\text{Interest} = 2,700
\]
\[
\text{Revised Profit Share} = 50,800
\]
\[
\text{Adjustment} = 2,700 - 60,000 = 6,500
\]
### Adjustment Entry:
The necessary adjustment entries to correct the omission are:
\[
\text{Dr. M's Capital Account} \, \text{₹6,500}
\]
\[
\text{Cr. K's Capital Account} \, \text{₹6,400}
\]
\[
\text{Cr. L's Capital Account} \, \text{₹100}
\]