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A,B,C are partners in a firm sharing profit and loss equally.capitals are 800000,600000,600000.On 1st October 2018,A advanced100000 to the firm wheares C took a loan of 150000 from the firm on the same date. it was agreed among the partners that C will pay interest at the rate 10%p.a.profit of the year ended 31st march 2019 amounted to 420000 before allowing or charging interest on loans.pass journal entries for interest on loans and prepare current account of the partners.
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A,B,C are partners in a firm sharing profit and loss equally.capitals ...
Journal Entries:

Interest on Loan:
C's Account Dr. 15000
To Interest on Loan Account 15000

Current Account of Partners:

A's Current Account:
Particulars Debit Credit
To Balance b/d - 800000
To Share of Profit (1/3) - 140000
To Advance to Firm 100000 -
By Balance c/d 940000 -
Total 1040000 1040000

B's Current Account:
Particulars Debit Credit
To Balance b/d - 600000
To Share of Profit (1/3) - 140000
By Balance c/d 740000 -
Total 740000 740000

C's Current Account:
Particulars Debit Credit
To Balance b/d - 600000
To Share of Profit (1/3) - 140000
To Interest on Loan 15000 -
By Loan from Firm - 150000
By Balance c/d 435000 -
Total 600000 600000

Explanation of Maintenance of Capital Accounts of Partners: Fixed and Fluctuating Capital Method:

Fixed Capital Method:
Under this method, the capital of each partner remains constant throughout the partnership. Any change in the capital is made only when there is a change in the partnership agreement, such as admission or retirement of a partner.

Fluctuating Capital Method:
Under this method, the capital of each partner fluctuates based on the amount of profit or loss shared by the partner in the firm. At the end of each financial year, the capital account of each partner is adjusted to reflect the profit or loss made by the firm.
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A,B,C are partners in a firm sharing profit and loss equally.capitals ...
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A,B,C are partners in a firm sharing profit and loss equally.capitals are 800000,600000,600000.On 1st October 2018,A advanced100000 to the firm wheares C took a loan of 150000 from the firm on the same date. it was agreed among the partners that C will pay interest at the rate 10%p.a.profit of the year ended 31st march 2019 amounted to 420000 before allowing or charging interest on loans.pass journal entries for interest on loans and prepare current account of the partners. Related: Maintenance of Capital Accounts of Partners: Fixed and Fluctuating Capital Method?
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