Partnership Fundamentals Notes5

Study Material & Notes for the Chapter 1

Partnership - Fundamentals

V. PAST ADJUSTMENT

Table 2.5.1
Method-1 When net impact is routed through partners accounts Process Steps
  1. Prepare an analytical table in the following format
Table 2.5.2.1
  1. Benefits to partners are mentioned on credit side of respective Partner column and on the debit side of firm and vice versa
  2. Total of columns designated to firm will give Firm’s net profit/loss
  3. Distribute the profit/loss in profit sharing ratio
  4. Sum partners columns and compute difference of total debit and total credit
  5. If net difference is debit, that partner’s capital account will be debited and vice versa 
Journal Entry
Table 2.5.3
Method-2 Adjustment entry for each adjustment
Table 2.5.4

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