pass journal entry provide 12% interest on capital amounting to 100000
Answers
Explanation:
IOC A/C...........Dr
To cash A/C.
100000into12/100. 12000
Interest on Capital A/c ----Dr. 12,000
To Capital A/c 12,000
(Being interest on Capital provided.)
GIVEN: Provide 12% interest on capital amounting to 100000
TO FIND: Pass the Journal Entry.
SOLUTION:
As we are given in the question,
Interest on Capital is to be provided to the owner or partner.
The total amount of capital is 1,00,000.
The rate at which interest is to be provided is 12%.
Therefore,
The amount of interest to be provided = Rate * Amount of Capital
The amount of interest to be provided = 12% * 1,00,000
The amount of interest to be provided = 12/100 * 1,00,000
The amount of interest to be provided =12,000
Therefore,
The journal entry to be passed for providing interest on Capital will be passed as:
Interest on Capital A/c ----Dr. 12,000
To Capital A/c 12,000
(Being interest on Capital provided.)
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