Commerce Exam > Commerce Questions > Tom and Harry were partners in a firm sharing...
Start Learning for Free
Tom and Harry were partners in a firm sharing profit in the ratio of 5:3 during the year ended 31st March 2015 Tom had withdraw rupees 40000 interest on his drawing amounted to rupees 2000 pass necessary journal entry for charging interest on drawing assuming that the capital of the partners were fluctuating ?
Most Upvoted Answer
Tom and Harry were partners in a firm sharing profit in the ratio of 5...
Interest of Drawing's a/c Dr. 2000
To Tom's current a/c 2000
( Being interest on drawing charged)
To Tom's current a/c 2000
( Being interest on drawing charged)
Community Answer
Tom and Harry were partners in a firm sharing profit in the ratio of 5...
Journal Entry for Charging Interest on Drawing
To record the interest on drawings taken by Tom, the following journal entry needs to be passed:
Date: March 31, 2015
Particulars | Debit | Credit
--- | --- | ---
Interest on Drawings A/c | 2,000 |
Partner's Capital A/c (Tom's Share) | 1,400 |
Partner's Capital A/c (Harry's Share) | 600 |
Explanation
- The interest on drawings is a type of expense for the firm, and hence, it needs to be debited to the "Interest on Drawings A/c".
- The interest on drawings is deducted from the partner's capital account because it is considered as a charge against the partner's capital. Therefore, Tom's capital account will be credited with Rs. 1,400 (5/8th of Rs. 2,000) and Harry's capital account will be credited with Rs. 600 (3/8th of Rs. 2,000).
Fluctuating Capital Accounts
In the given question, it is assumed that the partner's capital accounts are fluctuating. This means that the capital accounts of the partners will vary depending on various factors such as profits, losses, drawings, interest on drawings, etc. In such cases, the capital accounts are adjusted at the end of the accounting period to reflect the changes. The adjustments are made by passing a journal entry, which is called the "Adjustment Entry."
Conclusion
To summarize, the journal entry for charging interest on drawings is passed by debiting the "Interest on Drawings A/c" and crediting the partner's capital accounts. Fluctuating capital accounts are adjusted at the end of the accounting period to reflect the changes in the capital accounts.
To record the interest on drawings taken by Tom, the following journal entry needs to be passed:
Date: March 31, 2015
Particulars | Debit | Credit
--- | --- | ---
Interest on Drawings A/c | 2,000 |
Partner's Capital A/c (Tom's Share) | 1,400 |
Partner's Capital A/c (Harry's Share) | 600 |
Explanation
- The interest on drawings is a type of expense for the firm, and hence, it needs to be debited to the "Interest on Drawings A/c".
- The interest on drawings is deducted from the partner's capital account because it is considered as a charge against the partner's capital. Therefore, Tom's capital account will be credited with Rs. 1,400 (5/8th of Rs. 2,000) and Harry's capital account will be credited with Rs. 600 (3/8th of Rs. 2,000).
Fluctuating Capital Accounts
In the given question, it is assumed that the partner's capital accounts are fluctuating. This means that the capital accounts of the partners will vary depending on various factors such as profits, losses, drawings, interest on drawings, etc. In such cases, the capital accounts are adjusted at the end of the accounting period to reflect the changes. The adjustments are made by passing a journal entry, which is called the "Adjustment Entry."
Conclusion
To summarize, the journal entry for charging interest on drawings is passed by debiting the "Interest on Drawings A/c" and crediting the partner's capital accounts. Fluctuating capital accounts are adjusted at the end of the accounting period to reflect the changes in the capital accounts.
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
|
Explore Courses for Commerce exam
|
|
Similar Commerce Doubts
Top Courses for CommerceView all
Tom and Harry were partners in a firm sharing profit in the ratio of 5:3 during the year ended 31st March 2015 Tom had withdraw rupees 40000 interest on his drawing amounted to rupees 2000 pass necessary journal entry for charging interest on drawing assuming that the capital of the partners were fluctuating ?
Question Description
Tom and Harry were partners in a firm sharing profit in the ratio of 5:3 during the year ended 31st March 2015 Tom had withdraw rupees 40000 interest on his drawing amounted to rupees 2000 pass necessary journal entry for charging interest on drawing assuming that the capital of the partners were fluctuating ? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Tom and Harry were partners in a firm sharing profit in the ratio of 5:3 during the year ended 31st March 2015 Tom had withdraw rupees 40000 interest on his drawing amounted to rupees 2000 pass necessary journal entry for charging interest on drawing assuming that the capital of the partners were fluctuating ? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Tom and Harry were partners in a firm sharing profit in the ratio of 5:3 during the year ended 31st March 2015 Tom had withdraw rupees 40000 interest on his drawing amounted to rupees 2000 pass necessary journal entry for charging interest on drawing assuming that the capital of the partners were fluctuating ?.
Tom and Harry were partners in a firm sharing profit in the ratio of 5:3 during the year ended 31st March 2015 Tom had withdraw rupees 40000 interest on his drawing amounted to rupees 2000 pass necessary journal entry for charging interest on drawing assuming that the capital of the partners were fluctuating ? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Tom and Harry were partners in a firm sharing profit in the ratio of 5:3 during the year ended 31st March 2015 Tom had withdraw rupees 40000 interest on his drawing amounted to rupees 2000 pass necessary journal entry for charging interest on drawing assuming that the capital of the partners were fluctuating ? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Tom and Harry were partners in a firm sharing profit in the ratio of 5:3 during the year ended 31st March 2015 Tom had withdraw rupees 40000 interest on his drawing amounted to rupees 2000 pass necessary journal entry for charging interest on drawing assuming that the capital of the partners were fluctuating ?.
Solutions for Tom and Harry were partners in a firm sharing profit in the ratio of 5:3 during the year ended 31st March 2015 Tom had withdraw rupees 40000 interest on his drawing amounted to rupees 2000 pass necessary journal entry for charging interest on drawing assuming that the capital of the partners were fluctuating ? in English & in Hindi are available as part of our courses for Commerce.
Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of Tom and Harry were partners in a firm sharing profit in the ratio of 5:3 during the year ended 31st March 2015 Tom had withdraw rupees 40000 interest on his drawing amounted to rupees 2000 pass necessary journal entry for charging interest on drawing assuming that the capital of the partners were fluctuating ? defined & explained in the simplest way possible. Besides giving the explanation of
Tom and Harry were partners in a firm sharing profit in the ratio of 5:3 during the year ended 31st March 2015 Tom had withdraw rupees 40000 interest on his drawing amounted to rupees 2000 pass necessary journal entry for charging interest on drawing assuming that the capital of the partners were fluctuating ?, a detailed solution for Tom and Harry were partners in a firm sharing profit in the ratio of 5:3 during the year ended 31st March 2015 Tom had withdraw rupees 40000 interest on his drawing amounted to rupees 2000 pass necessary journal entry for charging interest on drawing assuming that the capital of the partners were fluctuating ? has been provided alongside types of Tom and Harry were partners in a firm sharing profit in the ratio of 5:3 during the year ended 31st March 2015 Tom had withdraw rupees 40000 interest on his drawing amounted to rupees 2000 pass necessary journal entry for charging interest on drawing assuming that the capital of the partners were fluctuating ? theory, EduRev gives you an
ample number of questions to practice Tom and Harry were partners in a firm sharing profit in the ratio of 5:3 during the year ended 31st March 2015 Tom had withdraw rupees 40000 interest on his drawing amounted to rupees 2000 pass necessary journal entry for charging interest on drawing assuming that the capital of the partners were fluctuating ? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup