Question

X and Y are partners in the ratio of 3: 2. Their capitals are 2,00,000 and R1,00,000 respectively. Interest on capitals is allowed @ 8% p.a. Firm earned a profit of 715,000 for the year ended 31st March 2019. As per partnership agreement, interest on capital is treated a charge on protits. Interest on Capital will be​

Answer 1

Answer:

Explanation:

X and Y are partners in the ratio of 3 : 2. Their capitals are ₹2,00,000 and ₹1,00,000 respectively. Interest on capitals is allowed @ 8% p.a. Firm earned a profit of ₹15,000 for the year ended 31st March 2019.

                                JOURNAL ENTRIES                                              

Profit and loss A/c  Dr.      10,000

              To profit and loss Appropriation A/c  10,000

(Being profit transferred to P&L app account)

Profit and loss appropriation A/c  Dr. 15,000

      To X's capital A/c                                        10,000

      To Y's capital A/c                                          5000

(Being interest on capital allowed to partners)