X, Y and Z are equal partners with fixed capitals of ₹2,00,000, ₹3,00,000 and ?4,00,000 respectively. After closing the accounts for the year ending 31st March 2019 it was discovered that interest on capitals @ 8% p.a. was omitted to be provided. In the adjusting entry :
(A) Dr. X and Cr. Y by ₹8,000
(B) Cr. X and Dr. Z by ₹8,000
(C) Dr. X and Cr. Z by ₹8.000
(D) Cr. X and Dr. Y by ₹8,000
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Particulars X Y X Interest on capital to be credited@8%2400016000 8000 Add: Profit to be distributed 60003600 2400 Less : Interest @ 10% (30000)(20000) (10000) Net effect Nil (400) 400Interest has been charged at a higher rate by 2%.So,profit needs to be increased by 2%.
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