Anita and Ankita are partners sharing profits equally. Their capitals, maintained following Fluctuating Capital Accounts Method, as on 31st March, 2017 were $R s .5, 00, 000$ and $R s . 4, 00, 000$ respectively. Partnership Deed provided to allow interest on capital @ 10% p.a.The firm earned net profit of $R s . 2, 00, 000$ for the year ended 31st March, 2018.
Pass the Journal entry for interest on capital.

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Solution

Dr. Profit and Loss Appropriation A/c by $R s . 90, 000$ ;
Cr. Anita's Capital A/c by $R s . 50, 000$ and
Ankita's Capital A/c by $R s . 40, 000$ .

Working Note :
Calculation of Interest on Capital -
Anita $= \frac{10}{100} \times R s .500000 = R s . 50000$
Ankita $= \frac{10}{100} \times R s . 400000 = R s . 40000$

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Q. Anita and Ankita are partners sharing profits equally. Their capitals, maintained following Fluctuating Capital Accounts Method, as on 31st March, 2017 were ₹ 5,00,000 and ₹ 4,00,000 respectively. Partnership Deed provided to allow interest on capital @ 10% p.a. The firm earned net profit of ₹ 2,00,000 for the year ended 31st March, 2018.
Pass the journal entry for interest on capital.

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P

and

Q

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and

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10 %

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Dr. Profit and Loss Appropriation A/c by Rs.90,000;Cr. Anita's Capital A/c by Rs.50,000 and Ankita's Capital A/c by Rs.40,000.Working Note :Calculation of Interest on Capital -Anita =10100×Rs.500000=Rs.50000Ankita =10100×Rs.400000=Rs.40000