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Answer:- Interest on Capital means the interest on the partner’s capital. It is a distribution of part of the profit in the capital ratio. Interest on capital is allowed to compensate those partners who have contributed more capital than the…
Answer:- Adjusting Entry:- Interest on Capital A/c …Dr. To Partner’s Capital A/c (Being the interest on capital allowed to partner)
Answer:- When the amount of available profit is less than the total amount of interest on capital, the available profit will be distributed in the ratio of interest on capital of each partner.
Answer:- Interest on Saloni’s Capital = ₹ 20,000 * 6/100 = ₹ 1,200 Interest on Shrishti’s Capital = ₹ 10,000 * 6/100 = ₹ 600 Since the amount of available profit ₹ 1,500 is less than the total amount of…
Answer:- Rent paid to a partner for the use of his premises is a charge against profit and thus, is treated as an expense of the firm to be debited to the Profit and Loss Account and credited to his…
Answer:- Interest on a Loan by the Partner is debited to the Profit and Loss Account since it is a charge against profit and credited to Partner’s Loan Account since it is a gain to a partner as a lender…
Answer:- Interest on Loan taken by a partner from the firm is debited to Partner’s Current Account since partner’s capitals are fixed and credited to Profit and Loss Account since it is a gain to a firm.
Partner’s Loan Account is an account to which loan given by a partner and interest due thereon is credited Partner’s Capital Account is an account to which capital contributed by the partner is credited.
Answer:- a) Adjusting Entry: Concerned Partner’s Capital A/c …Dr. To Interest on Loan A/c ( Being the interest due on loan to partner) b) Closing Entry: Interest on Loan A/c …Dr. To Profit and Loss A/c
Solution:- Date Particulars Dr. (₹) March 31 Profit and Loss Appropriation A/c …Dr. To General Reserve A/c (Being 20% of the profit transferred to the General Reserve) 60,000 60,000