A, B and C are partners in a firm. They had omitted interest on capital @10% p.a. forthree years ended 31st March, 2013. Their fixed capitals on which interest was to becalculated throughout were:A `1,00,000B ` 80,000plC ` 70,000
Give the necessary adjusting journal entry with working notes.
pls give the solution that who the ammunt come
Journal | ||||
Particulars | L.F. | Debit AmountRs | Credit AmountRs | |
A’s Capital A/c | Dr. | 5,000 | ||
To B’s Capital A/c | 1,000 | |||
To C’s Capital A/c | 4,000 | |||
(Being adjustment of interest on capital omitted in previous 3 years) | ||||
1. Calculation of Interest on Capital:
A = 1,00,000 *10 / 100 = Rs. 10,000
B = 80,000 * 10/100 = Rs. 8,000
C= 70,000 * 10/100 = Rs. 7,000
Total Interest on Capital = Rs 25,000 (for one year)
For 3 years = Rs 25,000 * 3 = Rs 75,000
The above interest on capital has not been credited to partners, which means the amount (Rs 75,000) must have been distributed as profit to them.
Statement Showing Adjustment | ||||
Particulars | A | B | C | Total |
Amount which should have been credited by way of interest on capital: In 2011 | 10,000 | 8,000 | 7,000 | 25,000 |
In 2012 In 2013 | 10,000 10,000 | 8,000 8,000 | 7,000 7,000 | 25,000 25,000 |
Amount which should have been debited for sharing the above loss: | 30,000 | 24,000 | 21,000 | 75,000 |
Wrong Distribution | 25,000 | 25,000 | 25,000 | 75,000 |
Net Effect | 5,000(Dr.) | 1,000(Cr.) | 4,000(Cr.) | NIL |