Practicing Success
Rahul and Samarth were partners sharing P & L in ratio 2 : 1. Their fixed capitals were ₹8,00,000 and ₹10,00,000 respectively for the year ended March 31, 2023, the profits of ₹6,00,000 were distributed without providing for interest on Capitals @ 10% p.a. as provided in deed. While Passing adjustment entry, Samarth's Current A/c will be ___________ by ₹ ___________ |
Debited ₹40,000 Credited ₹40,000 Debited ₹60,000 Credited ₹1,00,000 |
Credited ₹40,000 |
The correct answer is option 2- Credited ₹40,000. Fixed capital at the end = Rahul and Samarth (₹8,00,000 and ₹10,00,000) Interest on Rahul's Capital = ₹8,00,000 x 10/100 Interest on Samrath's capital = ₹10,00,000 x 10/100 This interest is an expense for the firm due to profit of the firm reduces or loss occurs and this loss is borne by partners in their profit sharing ratio. So, ₹1,80,000 is shared by partners in 2:1. Rahul is credited by interest of ₹80000 and debited for loss by ₹1,20,000 so net debit is ₹40,000 So net effect is Rahul is debited by ₹40,000 and Samrath is credited by ₹40,000. |