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Amir and salman are partner sharing profits and losses in equal ratio with capital 300000 and 180000 respectively as on 1.4.07 . On july they decided to keep equal capital ,keeping total capital uchanged by bringing or withdrawing necessary cash .intrest on capital is allowed@12% pa . Calculate intrest on capital for yr on 31.3.2008 .also pass entry for intrest on capital ?
Most Upvoted Answer
Amir and salman are partner sharing profits and losses in equal ratio ...
Calculation of Interest on Capital:
- Amir's initial capital = 300000
- Salman's initial capital = 180000
- Total initial capital = 480000
- On July, they decide to keep equal capital, so each partner contributes (300000-180000)/2 = 60000
- New capital of Amir = 360000
- New capital of Salman = 240000
- Total capital = 600000
- Interest on capital @12% p.a. = (360000+240000)/2 * 12/100 = 72000
Journal Entry for Interest on Capital:
Interest on capital is an expense for the partnership firm, so it will be debited to the Profit and Loss Appropriation Account. At the same time, it is an income for the partners, so it will be credited to their respective capital accounts. The journal entry will be as follows:
Profit and Loss Appropriation Account Dr. 72000
Amir's Capital Account Cr. 36000
Salman's Capital Account Cr. 36000
Explanation:
Interest on capital is the amount paid by the partnership firm to the partners for the use of their capital. In this case, Amir and Salman have contributed their capital to the firm, and they are entitled to receive interest on their respective capital. The interest rate is decided by the partners and mentioned in the partnership deed. In this case, the rate is 12% p.a.
When the partners decide to keep equal capital, the existing capital is adjusted by bringing or withdrawing cash. In this case, Salman has to contribute 120000 to make his capital equal to Amir's capital. This will increase the total capital of the firm to 600000. The interest on capital is calculated on the average capital for the year, which is (360000+240000)/2 = 300000. The interest is an expense for the firm and an income for the partners, so it is credited to their respective capital accounts. The Profit and Loss Appropriation Account is debited with the same amount to transfer the expense to the profit and loss account.
- Amir's initial capital = 300000
- Salman's initial capital = 180000
- Total initial capital = 480000
- On July, they decide to keep equal capital, so each partner contributes (300000-180000)/2 = 60000
- New capital of Amir = 360000
- New capital of Salman = 240000
- Total capital = 600000
- Interest on capital @12% p.a. = (360000+240000)/2 * 12/100 = 72000
Journal Entry for Interest on Capital:
Interest on capital is an expense for the partnership firm, so it will be debited to the Profit and Loss Appropriation Account. At the same time, it is an income for the partners, so it will be credited to their respective capital accounts. The journal entry will be as follows:
Profit and Loss Appropriation Account Dr. 72000
Amir's Capital Account Cr. 36000
Salman's Capital Account Cr. 36000
Explanation:
Interest on capital is the amount paid by the partnership firm to the partners for the use of their capital. In this case, Amir and Salman have contributed their capital to the firm, and they are entitled to receive interest on their respective capital. The interest rate is decided by the partners and mentioned in the partnership deed. In this case, the rate is 12% p.a.
When the partners decide to keep equal capital, the existing capital is adjusted by bringing or withdrawing cash. In this case, Salman has to contribute 120000 to make his capital equal to Amir's capital. This will increase the total capital of the firm to 600000. The interest on capital is calculated on the average capital for the year, which is (360000+240000)/2 = 300000. The interest is an expense for the firm and an income for the partners, so it is credited to their respective capital accounts. The Profit and Loss Appropriation Account is debited with the same amount to transfer the expense to the profit and loss account.
Community Answer
Amir and salman are partner sharing profits and losses in equal ratio ...
Hi there !
My answer is For Amir capital = 30,600
For Salman capital = 27,000
Profit and loss appropriation A/c Dr. 57,600
To Amir capital A/c 30,600
To Salman capital A/c 27,000
Amir will withdraw 60,000 and Salman will bring 60,000 as their capital were same i.e 240,000 each.
My answer is For Amir capital = 30,600
For Salman capital = 27,000
Profit and loss appropriation A/c Dr. 57,600
To Amir capital A/c 30,600
To Salman capital A/c 27,000
Amir will withdraw 60,000 and Salman will bring 60,000 as their capital were same i.e 240,000 each.
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Amir and salman are partner sharing profits and losses in equal ratio with capital 300000 and 180000 respectively as on 1.4.07 . On july they decided to keep equal capital ,keeping total capital uchanged by bringing or withdrawing necessary cash .intrest on capital is allowed@12% pa . Calculate intrest on capital for yr on 31.3.2008 .also pass entry for intrest on capital ?
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Amir and salman are partner sharing profits and losses in equal ratio with capital 300000 and 180000 respectively as on 1.4.07 . On july they decided to keep equal capital ,keeping total capital uchanged by bringing or withdrawing necessary cash .intrest on capital is allowed@12% pa . Calculate intrest on capital for yr on 31.3.2008 .also pass entry for intrest on capital ? 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 Amir and salman are partner sharing profits and losses in equal ratio with capital 300000 and 180000 respectively as on 1.4.07 . On july they decided to keep equal capital ,keeping total capital uchanged by bringing or withdrawing necessary cash .intrest on capital is allowed@12% pa . Calculate intrest on capital for yr on 31.3.2008 .also pass entry for intrest on capital ? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Amir and salman are partner sharing profits and losses in equal ratio with capital 300000 and 180000 respectively as on 1.4.07 . On july they decided to keep equal capital ,keeping total capital uchanged by bringing or withdrawing necessary cash .intrest on capital is allowed@12% pa . Calculate intrest on capital for yr on 31.3.2008 .also pass entry for intrest on capital ?.
Amir and salman are partner sharing profits and losses in equal ratio with capital 300000 and 180000 respectively as on 1.4.07 . On july they decided to keep equal capital ,keeping total capital uchanged by bringing or withdrawing necessary cash .intrest on capital is allowed@12% pa . Calculate intrest on capital for yr on 31.3.2008 .also pass entry for intrest on capital ? 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 Amir and salman are partner sharing profits and losses in equal ratio with capital 300000 and 180000 respectively as on 1.4.07 . On july they decided to keep equal capital ,keeping total capital uchanged by bringing or withdrawing necessary cash .intrest on capital is allowed@12% pa . Calculate intrest on capital for yr on 31.3.2008 .also pass entry for intrest on capital ? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Amir and salman are partner sharing profits and losses in equal ratio with capital 300000 and 180000 respectively as on 1.4.07 . On july they decided to keep equal capital ,keeping total capital uchanged by bringing or withdrawing necessary cash .intrest on capital is allowed@12% pa . Calculate intrest on capital for yr on 31.3.2008 .also pass entry for intrest on capital ?.
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Amir and salman are partner sharing profits and losses in equal ratio with capital 300000 and 180000 respectively as on 1.4.07 . On july they decided to keep equal capital ,keeping total capital uchanged by bringing or withdrawing necessary cash .intrest on capital is allowed@12% pa . Calculate intrest on capital for yr on 31.3.2008 .also pass entry for intrest on capital ?, a detailed solution for Amir and salman are partner sharing profits and losses in equal ratio with capital 300000 and 180000 respectively as on 1.4.07 . On july they decided to keep equal capital ,keeping total capital uchanged by bringing or withdrawing necessary cash .intrest on capital is allowed@12% pa . Calculate intrest on capital for yr on 31.3.2008 .also pass entry for intrest on capital ? has been provided alongside types of Amir and salman are partner sharing profits and losses in equal ratio with capital 300000 and 180000 respectively as on 1.4.07 . On july they decided to keep equal capital ,keeping total capital uchanged by bringing or withdrawing necessary cash .intrest on capital is allowed@12% pa . Calculate intrest on capital for yr on 31.3.2008 .also pass entry for intrest on capital ? theory, EduRev gives you an
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