Question

Ram & Sam were partners in a firm sharing profits in the ratio of 3:5. Their fixed capitals were Ram '5,00,000 & Shyam ' 9,00,000. After accounts are closed it was found that interest on capital @ 10% p.a is to be provided not credited to capital account. Pass adjustment entry. *

Answer 1

Answer:

ram's interest = 5,00,000×10/100 = 50,000

Sam's interest = 9,00,000×10/100 = 90,000

details ram sam firm

interest on

capital 50,000 90,000 (1, 40,000)

profit/loss (52, 500) (87, 500) 1,40,000

net effect (2, 500) 2,500 nil

entry :- ram's capital AC..... dr. 2,500

to sam's capital AC 2,500