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A, B and C shared the profit of Rs.75,000 in the ratio of 2:2:1 without providing interest on B's loan of Rs.50,000 given in the beginning of the year. partnership deed is silent on interest on loan and the profit sharing ratio. give necessary adjustment entry.?
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A, B and C shared the profit of Rs.75,000 in the ratio of 2:2:1 withou...
Adjustment Entry for Interest on Loan
Calculation of Interest on Loan
- B's loan = Rs. 50,000
- Time period = 1 year
- Interest rate = 10%
- Interest on loan = Rs. 5,000 (50,000 x 10%)
Adjustment Entry
To record the interest on B's loan, the following adjustment entry needs to be made:
Interest on Loan A/c Dr. 5,000
To B's Loan A/c 5,000
Explanation
- The partnership deed is silent on interest on loan and profit sharing ratio, which means that B's loan was interest-free.
- However, since B's loan was used by the partnership, it is only fair to compensate B for the use of their funds.
- Therefore, interest on B's loan needs to be calculated and recorded in the books of accounts.
- The adjustment entry increases the Interest on Loan account and decreases B's Loan account by the same amount, reflecting the payment of interest on B's loan.
- This adjustment entry will not affect the profit sharing ratio as the interest on loan is not considered as a part of the profit.
- This entry is usually made at the end of the accounting period, before the distribution of profits to the partners.
Calculation of Interest on Loan
- B's loan = Rs. 50,000
- Time period = 1 year
- Interest rate = 10%
- Interest on loan = Rs. 5,000 (50,000 x 10%)
Adjustment Entry
To record the interest on B's loan, the following adjustment entry needs to be made:
Interest on Loan A/c Dr. 5,000
To B's Loan A/c 5,000
Explanation
- The partnership deed is silent on interest on loan and profit sharing ratio, which means that B's loan was interest-free.
- However, since B's loan was used by the partnership, it is only fair to compensate B for the use of their funds.
- Therefore, interest on B's loan needs to be calculated and recorded in the books of accounts.
- The adjustment entry increases the Interest on Loan account and decreases B's Loan account by the same amount, reflecting the payment of interest on B's loan.
- This adjustment entry will not affect the profit sharing ratio as the interest on loan is not considered as a part of the profit.
- This entry is usually made at the end of the accounting period, before the distribution of profits to the partners.
Community Answer
A, B and C shared the profit of Rs.75,000 in the ratio of 2:2:1 withou...
distribution of 75000 in the ratio of 2:2:1 ratio i,e it's become 30000:30000:15000. deducted B's loan of 50000*6/100 ..I,e 3000... now , 3000 would be deducted from original profit of 75000...I,e 72000.. then 72000 should be distributed into 2:2:1.. I,e it's become..28800:28800:14400.. now... then make past adjustment ... your ans would be.. A's capital a/c. Dr. 1200 C's capital a/c . Dr. 600 to. B's capital a/c. 1800..
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A, B and C shared the profit of Rs.75,000 in the ratio of 2:2:1 without providing interest on B's loan of Rs.50,000 given in the beginning of the year. partnership deed is silent on interest on loan and the profit sharing ratio. give necessary adjustment entry.?
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A, B and C shared the profit of Rs.75,000 in the ratio of 2:2:1 without providing interest on B's loan of Rs.50,000 given in the beginning of the year. partnership deed is silent on interest on loan and the profit sharing ratio. give necessary adjustment entry.? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about A, B and C shared the profit of Rs.75,000 in the ratio of 2:2:1 without providing interest on B's loan of Rs.50,000 given in the beginning of the year. partnership deed is silent on interest on loan and the profit sharing ratio. give necessary adjustment entry.? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A, B and C shared the profit of Rs.75,000 in the ratio of 2:2:1 without providing interest on B's loan of Rs.50,000 given in the beginning of the year. partnership deed is silent on interest on loan and the profit sharing ratio. give necessary adjustment entry.?.
A, B and C shared the profit of Rs.75,000 in the ratio of 2:2:1 without providing interest on B's loan of Rs.50,000 given in the beginning of the year. partnership deed is silent on interest on loan and the profit sharing ratio. give necessary adjustment entry.? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about A, B and C shared the profit of Rs.75,000 in the ratio of 2:2:1 without providing interest on B's loan of Rs.50,000 given in the beginning of the year. partnership deed is silent on interest on loan and the profit sharing ratio. give necessary adjustment entry.? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A, B and C shared the profit of Rs.75,000 in the ratio of 2:2:1 without providing interest on B's loan of Rs.50,000 given in the beginning of the year. partnership deed is silent on interest on loan and the profit sharing ratio. give necessary adjustment entry.?.
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A, B and C shared the profit of Rs.75,000 in the ratio of 2:2:1 without providing interest on B's loan of Rs.50,000 given in the beginning of the year. partnership deed is silent on interest on loan and the profit sharing ratio. give necessary adjustment entry.?, a detailed solution for A, B and C shared the profit of Rs.75,000 in the ratio of 2:2:1 without providing interest on B's loan of Rs.50,000 given in the beginning of the year. partnership deed is silent on interest on loan and the profit sharing ratio. give necessary adjustment entry.? has been provided alongside types of A, B and C shared the profit of Rs.75,000 in the ratio of 2:2:1 without providing interest on B's loan of Rs.50,000 given in the beginning of the year. partnership deed is silent on interest on loan and the profit sharing ratio. give necessary adjustment entry.? theory, EduRev gives you an
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