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X,y and z are partner in a firm sharing profits and losses in the ratio of 4:3:3.their fixed capital were Rs 1,00,000 , 2,00,000 and 3,00,000 respectively. For the year 1996 interest on capital was credited to them @10% instead of 9%p.a. pass the necessary adjusting journal entry?
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Adjusting Journal Entry for Interest on Capital

Background: X, Y, and Z are partners in a firm sharing profits and losses in the ratio of 4:3:3. Their fixed capital amounts are Rs 1,00,000, 2,00,000, and 3,00,000 respectively.

Error: For the year 1996, interest on capital was credited to them at a rate of 10% instead of the agreed-upon rate of 9% per annum.

Adjustment: To correct this error, we need to pass an adjusting journal entry. The entry will be as follows:

Debit: Interest on Capital Account - Rs 2,500 (1,00,000 x 9% x 1/12 + 2,00,000 x 9% x 1/12 + 3,00,000 x 9% x 1/12)

Credit: X's Capital Account - Rs 1,000 (1,00,000 x 10% x 1/12)

Credit: Y's Capital Account - Rs 750 (2,00,000 x 10% x 1/12 x 3/10)

Credit: Z's Capital Account - Rs 750 (3,00,000 x 10% x 1/12 x 3/10)

Explanation: The adjusting entry debits the Interest on Capital Account for the correct amount of interest based on the agreed-upon rate of 9% per annum. The credit portion of the entry distributes the interest to the individual partners based on their capital balance and profit-sharing ratio. X will receive Rs 1,000, while Y and Z will receive Rs 750 each. This entry ensures that the partners' capital accounts reflect the correct amount of interest earned on their invested capital for the year.
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X,y and z are partner in a firm sharing profits and losses in the ratio of 4:3:3.their fixed capital were Rs 1,00,000 , 2,00,000 and 3,00,000 respectively. For the year 1996 interest on capital was credited to them @10% instead of 9%p.a. pass the necessary adjusting journal entry?
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