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A,B,C are partners in a firm sharing profits and losses in the ratio of 2:3:5.their fixed capital were ₹15,00,000,₹30,00,000 and60,00,000 respectively.for the year 2016,interest on capital was credited to them @12%instead of 10%.pass the necessary adjustment entry.?
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A,B,C are partners in a firm sharing profits and losses in the ratio o...
Adjustment Entry for Interest on Capital
Given:
Partners - A, B, C
Profit sharing ratio - 2:3:5
Fixed capital - ₹15,00,000, ₹30,00,000, ₹60,00,000
Interest on Capital - 12% instead of 10%
Step 1: Calculation of Interest on Capital
Interest on capital will be calculated on the basis of fixed capital invested by each partner.
A's Interest on Capital = ₹15,00,000 x 12% = ₹1,80,000
B's Interest on Capital = ₹30,00,000 x 12% = ₹3,60,000
C's Interest on Capital = ₹60,00,000 x 12% = ₹7,20,000
Step 2: Adjustment Entry
The adjustment entry will be made to credit the additional interest to each partner's capital account and debit the same amount to the firm's Profit and Loss Appropriation Account.
Journal entry will be as follows:
Partner's Capital Account Dr ₹(Interest on Capital)
To Profit and Loss Appropriation Account ₹(Interest on Capital)
For A's Capital Account:
A's Capital Account Dr ₹1,80,000
To Profit and Loss Appropriation Account ₹1,80,000
For B's Capital Account:
B's Capital Account Dr ₹3,60,000
To Profit and Loss Appropriation Account ₹3,60,000
For C's Capital Account:
C's Capital Account Dr ₹7,20,000
To Profit and Loss Appropriation Account ₹7,20,000
Step 3: Posting in Ledger Accounts
The above adjustment entry will be posted in the respective ledger accounts of each partner and Profit and Loss Appropriation Account.
Conclusion:
By following the above steps, we can pass the necessary adjustment entry for interest on capital and make the required changes in the accounts of partners and the firm.
Given:
Partners - A, B, C
Profit sharing ratio - 2:3:5
Fixed capital - ₹15,00,000, ₹30,00,000, ₹60,00,000
Interest on Capital - 12% instead of 10%
Step 1: Calculation of Interest on Capital
Interest on capital will be calculated on the basis of fixed capital invested by each partner.
A's Interest on Capital = ₹15,00,000 x 12% = ₹1,80,000
B's Interest on Capital = ₹30,00,000 x 12% = ₹3,60,000
C's Interest on Capital = ₹60,00,000 x 12% = ₹7,20,000
Step 2: Adjustment Entry
The adjustment entry will be made to credit the additional interest to each partner's capital account and debit the same amount to the firm's Profit and Loss Appropriation Account.
Journal entry will be as follows:
Partner's Capital Account Dr ₹(Interest on Capital)
To Profit and Loss Appropriation Account ₹(Interest on Capital)
For A's Capital Account:
A's Capital Account Dr ₹1,80,000
To Profit and Loss Appropriation Account ₹1,80,000
For B's Capital Account:
B's Capital Account Dr ₹3,60,000
To Profit and Loss Appropriation Account ₹3,60,000
For C's Capital Account:
C's Capital Account Dr ₹7,20,000
To Profit and Loss Appropriation Account ₹7,20,000
Step 3: Posting in Ledger Accounts
The above adjustment entry will be posted in the respective ledger accounts of each partner and Profit and Loss Appropriation Account.
Conclusion:
By following the above steps, we can pass the necessary adjustment entry for interest on capital and make the required changes in the accounts of partners and the firm.
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A,B,C are partners in a firm sharing profits and losses in the ratio of 2:3:5.their fixed capital were ₹15,00,000,₹30,00,000 and60,00,000 respectively.for the year 2016,interest on capital was credited to them @12%instead of 10%.pass the necessary adjustment entry.?
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A,B,C are partners in a firm sharing profits and losses in the ratio of 2:3:5.their fixed capital were ₹15,00,000,₹30,00,000 and60,00,000 respectively.for the year 2016,interest on capital was credited to them @12%instead of 10%.pass the necessary adjustment entry.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A,B,C are partners in a firm sharing profits and losses in the ratio of 2:3:5.their fixed capital were ₹15,00,000,₹30,00,000 and60,00,000 respectively.for the year 2016,interest on capital was credited to them @12%instead of 10%.pass the necessary adjustment entry.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A,B,C are partners in a firm sharing profits and losses in the ratio of 2:3:5.their fixed capital were ₹15,00,000,₹30,00,000 and60,00,000 respectively.for the year 2016,interest on capital was credited to them @12%instead of 10%.pass the necessary adjustment entry.?.
A,B,C are partners in a firm sharing profits and losses in the ratio of 2:3:5.their fixed capital were ₹15,00,000,₹30,00,000 and60,00,000 respectively.for the year 2016,interest on capital was credited to them @12%instead of 10%.pass the necessary adjustment entry.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A,B,C are partners in a firm sharing profits and losses in the ratio of 2:3:5.their fixed capital were ₹15,00,000,₹30,00,000 and60,00,000 respectively.for the year 2016,interest on capital was credited to them @12%instead of 10%.pass the necessary adjustment entry.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A,B,C are partners in a firm sharing profits and losses in the ratio of 2:3:5.their fixed capital were ₹15,00,000,₹30,00,000 and60,00,000 respectively.for the year 2016,interest on capital was credited to them @12%instead of 10%.pass the necessary adjustment entry.?.
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