Question

Give the adjusting entry and closing entry for interest on a loan taken by a partner from the firm when the firm follows the Fluctuating Capital Method.

Answer 1

Date	Particulars	L.F.	Debit (₹)	Credit (₹)
(i)	Adjusting Entry:
	Partner’s Capital A/c   ...Dr.		xxx	-
	To Interest on Partner’s Loan A/c		-	xxx
	(Being interest charged on a loan taken by the partner.)
(ii)	Closing Entry:
	Interest on Partner’s Loan A/c   ...Dr.		xxx	-
	To Profit and Loss A/c		-	xxx
	(Being the closing of interest on the loan taken by the partner.)