Question

discovered that the interest on capital @ 10% per annum had been omitted. The profit On December 31st, 2018 after closing of accounts, the capitals of A, B and C stood in the books of firm at * 2,00,000, 71,50,000 and 1,00,000. Subsequently, it was for the year amounted to 375,000 and the partner's drawings had been * 10,000, 7.500 and 7 5,000 respectively. Calculate interest on capital.​

Answer 1

Answer:

Adjusting Journal Entry is as follows:-

Y's current A/c Dr. 600

To X's current A/c 250

To Z's current A/c 350

(Being Adjustment entry passed)

Table Showing Net Adjustments to be Made

Year X Y Z

Table 1 3000 2400 2100

Table 2 (2750) (3000) (1750)

Net Effect 250 (600) 350

Table 1- Amount to be credited as interest on capital

Particulars X Y Z

For the year 2016 1000 800 700

For the year 2017 1000 800 700

For the year 2018 1000 800 700

Total 3000 2400 2100

Table 2- Amount Wrongly credited as profits

Particulars X Y Z

Amount wrongly credited as profits

for the year 2016 500 1000 1000

for the year 2017 1250 750 500

for the year 2018 1000 1250 250

Total 2750 3000 1750

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