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Standard VII

Mathematics

Interest

X, Y and Z ...

Question

$X, Y$ and $Z$ are partners in a firm sharing profits and losses in the ratio of $5 : 3 : 2$ . Their fixed capitals were $R s . 3, 00, 000; R s . 2, 00, 000$ and $R s . 1, 00, 000$ respectively. For the year ended 31st March, 2018, interest on capital was credited to them @ $10 %$ p.a. instead of $8 %$ p.a.
Showing your working notes clearly, pass necessary adjustment Journal entry.

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Solution

Particulars X Y X
Interest on capital to be credited@8% 24000 16000 8000
Add: Profit to be distributed 6000 3600 2400
Less : Interest @ 10% (30000) (20000) (10000)
Net effect Nil (400) 400
Interest has been charged at a higher rate by 2%.So,profit needs to be increased by 2%.

Adjustment Entry is:-
Y's current A/c Dr. 400
To Z's current A/c 400
(Being adjustment entry passed)

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Similar questions

Q. Ram, Shyam and Mohan were partners in a firm sharing profits and losses in.the ratio of 2 : 1 : 2. The capitals were fixed at Rs. 3,00,000, 1 ,00,000, and 2,00,000. For the year ended 31st March, 2018, interest on capital was credited to them @ 9% instead of 10% p.a. The profit for the year before charging interest was Rs. 2,50,000. Show your working notes clearly and pass necessary adjustment entry.

A, B and C are partners in a firm sharing Profits and losses in the ratio of 2:3:5. Their fixed capitals were Rs 15,00,000, Rs 30,00,000 and Rs 60,00,000 respectively. For the year ended 31st March, 2014 interest on capital was credited to them at 12% instead of 10%. Pass the necessary adjustment entry.

X, Y

and

Z

are partners. They have omitted interest on capital @

10 %

p.a. for three years ended 31st March, 2018. Their fixed capitals on which interest was to be calculated throughout were:

X - R s . 10, 000; Y - R s . 8, 000

and

Z - R s . 7, 000

. Their profit-sharing ratios were:

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P

and

Q

were partners in a firm sharing profits and losses equally. Their fixed capitals were

R s . 2, 00, 000

and

R s . 3, 00, 000

respectively. The partnership deed provided for interest on capital

@ 12 %

per annum. For the year ended 31

^{s t}

March, 2016, the profits of the firm Rs.60,000 were distributed without providing interest on capital.
Pass necessary adjustment entry to rectify the error.

A, B

and

C

are partners in a firm sharing profits and losses in the ratio of

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. Their capitals (fixed) are

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Particulars	X	Y	X
Interest on capital to be credited@8%	24000	16000	8000
Add: Profit to be distributed	6000	3600	2400
Less : Interest @ 10%	(30000)	(20000)	(10000)
Net effect	Nil	(400)	400