Get 3 Yrs of CCI Pro Membership at Greater Value. Subscribe Now!

Query about adjustments in books

481 views

Save Share

A D - Loving Life

none

784 Points Posted on 28 June 2013

I know this que may sound silly for some of people here highly profiled but rather than being fool for lifetime I would choose to be fool for few hours :) So here it goes...... Suppose 2 partners start a business each with capital of 5 lakhs and then use for stock of Rs. 800000 and one lakh shop deposit and one lakh exp to start business. They earn 900000 b selling stock of 8 lakhs and take 50000(50kb) each forhousehold exp in reality for a month. But actually drawing shown in books of account is 5000 (5kb)......... when income tax asks about Rs. 895000 (900000-5000) then how a CA solves this mystery as his clients does'nt have 895000 but they have 800000 (900000-50000-50000) means whats the adjustment......... and if actual drawings are shown then capital will get less....that one number money will be affected.... how to solve.... Please give me a good solution............

Replies (1)

CA Vinay parmar

Chartered Accountant

1012 Points Posted on 28 June 2013

Dear Dhara,

First of all your question is not clear to me, then also to the extent what i hav understood i m answering from that point. your both the partner has drawn 50000 equally but in books you have shown as 5000. There is no need for that the firm has made Rs.1 lac profit as you said, that 1 lacs will get divide in to their profit sharing ratio let say 50:50 that equal profit will get added to their capital A/c and the same can be shown as withdrawn leaving your capital as it is.