Rahul and Parul started a partnership firm on 1st April, 2019 with capital of 3,00,000 and 2,50,000 respectively. On 1st July, they further introduced capital of 60,000 and 50,000 respectively. Parul, however withdrew * 30,000 out of his capital on 1st February, 2020. Compute Interest on Capital of Partners for the year ending 31st March, 2020 assuming rate of interest on capital at 10% per annum.
Answers
Answer:
Step-by-step explanation:
The following rectifying journal entries needs to be passed:-
P's capital A/c Dr. 60,000
Q's capital A/c Dr. 60,000
R's capital A/c Dr. 60,000
To Profit and loss Appropriation A/c 1,80,000
(Being the share of profit wrongly distributed reversed)
Profit and Loss Adjustment A/c Dr. 36,000
To R's capital A/c 36,000
(Being remuneration credited)
Profit and loss Adjustment A/c Dr. 30,000
To P's capital A/c(3,00,000*5%) 15,000
To Q's capital A/c(1,50,000*5%) 7,500
To R's capital A/c(1,50,000*5%) 7,500
(Being interest on capital credited to partners)
Profit and loss Adjustment A/c Dr. 1,14,000
To P's capital A/c 45,600
To Q's capital A/c 45,600
To R's capital A/c 22,800
(Being the divisible profit credited to partners)
Answer:
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