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Krishna, Sandeep and Karim are partners sharing profits in the ratio of 3:2:1. Their fixed capitals are: Krishan Rs. 1,20,000, Sandeep 90,000 and Karim 60,000. For the year 2006-07, interest was credited to them @ 6% p.a. instead of 5% p.a. Record adjustment entry.?
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Adjustment Entry for Interest on Capital
Adjustment entry is a type of journal entry made to correct an error or omission in the books of accounts. In this case, the adjustment entry is made to rectify the error of recording interest on capital @ 6% p.a. instead of 5% p.a.
Calculation of Interest on Capital
Krishna: Rs. 1,20,000 x 5% = Rs. 6,000
Sandeep: Rs. 90,000 x 5% = Rs. 4,500
Karim: Rs. 60,000 x 5% = Rs. 3,000
Total interest on capital = Rs. 13,500
Adjustment Entry
The adjustment entry for the above error is as follows:
Interest on Capital A/c Dr. Rs. 1,500
To Krishna’s Capital A/c Rs. 900
To Sandeep’s Capital A/c Rs. 600
To Karim’s Capital A/c Rs. 300
Explanation
The above adjustment entry increases the interest on capital account by Rs. 1,500. As the partners share profits in the ratio of 3:2:1, the interest on capital is distributed accordingly. Therefore, Krishna’s capital account is credited with Rs. 900 (3/6 x Rs. 1,500), Sandeep’s capital account is credited with Rs. 600 (2/6 x Rs. 1,500) and Karim’s capital account is credited with Rs. 300 (1/6 x Rs. 1,500).
Conclusion
The adjustment entry for interest on capital is made to rectify an error in recording the interest rate. It ensures that the interest on capital is calculated and distributed correctly among the partners.
Adjustment entry is a type of journal entry made to correct an error or omission in the books of accounts. In this case, the adjustment entry is made to rectify the error of recording interest on capital @ 6% p.a. instead of 5% p.a.
Calculation of Interest on Capital
Krishna: Rs. 1,20,000 x 5% = Rs. 6,000
Sandeep: Rs. 90,000 x 5% = Rs. 4,500
Karim: Rs. 60,000 x 5% = Rs. 3,000
Total interest on capital = Rs. 13,500
Adjustment Entry
The adjustment entry for the above error is as follows:
Interest on Capital A/c Dr. Rs. 1,500
To Krishna’s Capital A/c Rs. 900
To Sandeep’s Capital A/c Rs. 600
To Karim’s Capital A/c Rs. 300
Explanation
The above adjustment entry increases the interest on capital account by Rs. 1,500. As the partners share profits in the ratio of 3:2:1, the interest on capital is distributed accordingly. Therefore, Krishna’s capital account is credited with Rs. 900 (3/6 x Rs. 1,500), Sandeep’s capital account is credited with Rs. 600 (2/6 x Rs. 1,500) and Karim’s capital account is credited with Rs. 300 (1/6 x Rs. 1,500).
Conclusion
The adjustment entry for interest on capital is made to rectify an error in recording the interest rate. It ensures that the interest on capital is calculated and distributed correctly among the partners.
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Krishna, Sandeep and Karim are partners sharing profits in the ratio of 3:2:1. Their fixed capitals are: Krishan Rs. 1,20,000, Sandeep 90,000 and Karim 60,000. For the year 2006-07, interest was credited to them @ 6% p.a. instead of 5% p.a. Record adjustment entry.?
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Krishna, Sandeep and Karim are partners sharing profits in the ratio of 3:2:1. Their fixed capitals are: Krishan Rs. 1,20,000, Sandeep 90,000 and Karim 60,000. For the year 2006-07, interest was credited to them @ 6% p.a. instead of 5% p.a. Record adjustment entry.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Krishna, Sandeep and Karim are partners sharing profits in the ratio of 3:2:1. Their fixed capitals are: Krishan Rs. 1,20,000, Sandeep 90,000 and Karim 60,000. For the year 2006-07, interest was credited to them @ 6% p.a. instead of 5% p.a. Record adjustment entry.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Krishna, Sandeep and Karim are partners sharing profits in the ratio of 3:2:1. Their fixed capitals are: Krishan Rs. 1,20,000, Sandeep 90,000 and Karim 60,000. For the year 2006-07, interest was credited to them @ 6% p.a. instead of 5% p.a. Record adjustment entry.?.
Krishna, Sandeep and Karim are partners sharing profits in the ratio of 3:2:1. Their fixed capitals are: Krishan Rs. 1,20,000, Sandeep 90,000 and Karim 60,000. For the year 2006-07, interest was credited to them @ 6% p.a. instead of 5% p.a. Record adjustment entry.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Krishna, Sandeep and Karim are partners sharing profits in the ratio of 3:2:1. Their fixed capitals are: Krishan Rs. 1,20,000, Sandeep 90,000 and Karim 60,000. For the year 2006-07, interest was credited to them @ 6% p.a. instead of 5% p.a. Record adjustment entry.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Krishna, Sandeep and Karim are partners sharing profits in the ratio of 3:2:1. Their fixed capitals are: Krishan Rs. 1,20,000, Sandeep 90,000 and Karim 60,000. For the year 2006-07, interest was credited to them @ 6% p.a. instead of 5% p.a. Record adjustment entry.?.
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