Anita and Ankita are partners sharing profits equally. Their capitals, maintained following Fluctuating Capital Accounts Method, as on 1st April 2022 were ₹ 5,00,000 and ₹ 4,00,000 respectively. Partnership Deed Provided to allow interest on capital @ 10% p.a. The firm earned a net profit of ₹ 2,00,000 for the year ended 31st March 2023.

Pass the Journal entry for interest on capital

[Ans: Dr. Profit and Loss Appropriation A/c by ₹ 90,000; Cr. Anita’s Capital A/c by ₹ 50,000 and Ankita’s Capital A/c by ₹ 40,000.]

Anurag Pathak Changed status to publish April 12, 2023