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Indhu, Bindu & Kamla are partners in a firm sharing profits and losses in the ratio of 4:3:3. Their fixed capitals are ₹ 1,00,000; ₹2,00,000 & ₹3,00,000 respectively. For the year 2022-23, interest on
capital was credited to them @ 10% p.a. instead of 9% p.a.
3
Pass the adjustment entry and show the working clearly.?
capital was credited to them @ 10% p.a. instead of 9% p.a.
3
Pass the adjustment entry and show the working clearly.?
Most Upvoted Answer
Indhu, Bindu & Kamla are partners in a firm sharing profits and losses...
Adjustment entry for interest on capital at 10% p.a.
Interest on capital is calculated on the fixed capitals of the partners at the agreed rate. In this case, the interest rate was mistakenly calculated at 10% p.a. instead of the agreed rate of 9% p.a. To rectify this error, an adjustment entry needs to be passed.
Working:
1. Calculate the interest on capital for each partner at the correct rate of 9% p.a.
- Indhu's interest = ₹1,00,000 * 9% = ₹9,000
- Bindu's interest = ₹2,00,000 * 9% = ₹18,000
- Kamla's interest = ₹3,00,000 * 9% = ₹27,000
2. Calculate the excess interest credited at 10% p.a.
- Indhu's excess interest = ₹1,00,000 * (10% - 9%) = ₹1,000
- Bindu's excess interest = ₹2,00,000 * (10% - 9%) = ₹2,000
- Kamla's excess interest = ₹3,00,000 * (10% - 9%) = ₹3,000
Adjustment entry:
- Debit Excess Interest on Capital Account (Indhu) ₹1,000
- Debit Excess Interest on Capital Account (Bindu) ₹2,000
- Debit Excess Interest on Capital Account (Kamla) ₹3,000
- Credit Indhu's Capital Account ₹1,000
- Credit Bindu's Capital Account ₹2,000
- Credit Kamla's Capital Account ₹3,000
This adjustment entry ensures that the correct interest on capital is recorded for each partner and the excess interest credited at the higher rate is reversed. It helps in maintaining the accuracy of the financial statements and the profit-sharing ratios among the partners.
Interest on capital is calculated on the fixed capitals of the partners at the agreed rate. In this case, the interest rate was mistakenly calculated at 10% p.a. instead of the agreed rate of 9% p.a. To rectify this error, an adjustment entry needs to be passed.
Working:
1. Calculate the interest on capital for each partner at the correct rate of 9% p.a.
- Indhu's interest = ₹1,00,000 * 9% = ₹9,000
- Bindu's interest = ₹2,00,000 * 9% = ₹18,000
- Kamla's interest = ₹3,00,000 * 9% = ₹27,000
2. Calculate the excess interest credited at 10% p.a.
- Indhu's excess interest = ₹1,00,000 * (10% - 9%) = ₹1,000
- Bindu's excess interest = ₹2,00,000 * (10% - 9%) = ₹2,000
- Kamla's excess interest = ₹3,00,000 * (10% - 9%) = ₹3,000
Adjustment entry:
- Debit Excess Interest on Capital Account (Indhu) ₹1,000
- Debit Excess Interest on Capital Account (Bindu) ₹2,000
- Debit Excess Interest on Capital Account (Kamla) ₹3,000
- Credit Indhu's Capital Account ₹1,000
- Credit Bindu's Capital Account ₹2,000
- Credit Kamla's Capital Account ₹3,000
This adjustment entry ensures that the correct interest on capital is recorded for each partner and the excess interest credited at the higher rate is reversed. It helps in maintaining the accuracy of the financial statements and the profit-sharing ratios among the partners.
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Indhu, Bindu & Kamla are partners in a firm sharing profits and losses in the ratio of 4:3:3. Their fixed capitals are ₹ 1,00,000; ₹2,00,000 & ₹3,00,000 respectively. For the year 2022-23, interest oncapital was credited to them @ 10% p.a. instead of 9% p.a.3Pass the adjustment entry and show the working clearly.?
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Indhu, Bindu & Kamla are partners in a firm sharing profits and losses in the ratio of 4:3:3. Their fixed capitals are ₹ 1,00,000; ₹2,00,000 & ₹3,00,000 respectively. For the year 2022-23, interest oncapital was credited to them @ 10% p.a. instead of 9% p.a.3Pass the adjustment entry and show the working clearly.? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Indhu, Bindu & Kamla are partners in a firm sharing profits and losses in the ratio of 4:3:3. Their fixed capitals are ₹ 1,00,000; ₹2,00,000 & ₹3,00,000 respectively. For the year 2022-23, interest oncapital was credited to them @ 10% p.a. instead of 9% p.a.3Pass the adjustment entry and show the working clearly.? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Indhu, Bindu & Kamla are partners in a firm sharing profits and losses in the ratio of 4:3:3. Their fixed capitals are ₹ 1,00,000; ₹2,00,000 & ₹3,00,000 respectively. For the year 2022-23, interest oncapital was credited to them @ 10% p.a. instead of 9% p.a.3Pass the adjustment entry and show the working clearly.?.
Indhu, Bindu & Kamla are partners in a firm sharing profits and losses in the ratio of 4:3:3. Their fixed capitals are ₹ 1,00,000; ₹2,00,000 & ₹3,00,000 respectively. For the year 2022-23, interest oncapital was credited to them @ 10% p.a. instead of 9% p.a.3Pass the adjustment entry and show the working clearly.? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Indhu, Bindu & Kamla are partners in a firm sharing profits and losses in the ratio of 4:3:3. Their fixed capitals are ₹ 1,00,000; ₹2,00,000 & ₹3,00,000 respectively. For the year 2022-23, interest oncapital was credited to them @ 10% p.a. instead of 9% p.a.3Pass the adjustment entry and show the working clearly.? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Indhu, Bindu & Kamla are partners in a firm sharing profits and losses in the ratio of 4:3:3. Their fixed capitals are ₹ 1,00,000; ₹2,00,000 & ₹3,00,000 respectively. For the year 2022-23, interest oncapital was credited to them @ 10% p.a. instead of 9% p.a.3Pass the adjustment entry and show the working clearly.?.
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Indhu, Bindu & Kamla are partners in a firm sharing profits and losses in the ratio of 4:3:3. Their fixed capitals are ₹ 1,00,000; ₹2,00,000 & ₹3,00,000 respectively. For the year 2022-23, interest oncapital was credited to them @ 10% p.a. instead of 9% p.a.3Pass the adjustment entry and show the working clearly.?, a detailed solution for Indhu, Bindu & Kamla are partners in a firm sharing profits and losses in the ratio of 4:3:3. Their fixed capitals are ₹ 1,00,000; ₹2,00,000 & ₹3,00,000 respectively. For the year 2022-23, interest oncapital was credited to them @ 10% p.a. instead of 9% p.a.3Pass the adjustment entry and show the working clearly.? has been provided alongside types of Indhu, Bindu & Kamla are partners in a firm sharing profits and losses in the ratio of 4:3:3. Their fixed capitals are ₹ 1,00,000; ₹2,00,000 & ₹3,00,000 respectively. For the year 2022-23, interest oncapital was credited to them @ 10% p.a. instead of 9% p.a.3Pass the adjustment entry and show the working clearly.? theory, EduRev gives you an
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