Question

Anand, Ridhi and Shyam were partners in a firm, sharing profits and losses in the ratio of 2 : 2 : 1. Their fixed capitals were ₹ 1,00,000, ₹ 60,000, and ₹ 40,000, respectively. For the year ended 31st March, 2023, interest on capital was credited to their capital accounts @ 9% p.a instead of 7% p.a. Pass the necessary adjusting journal entry.

Answer 1

Adjustment Table
Particulars	Anand	Ridhi	Shyam	Firm
Wrongly allowed interest on capital @ 9%	(9,000)	(5,400)	(3,600)	(18,000)
Correct interest on capital @7%	7,000	4,200	2,800	14,000
Wrong distribution	(2,000)	(1,200)	(800)	(4,000)
Profit to be credited	1,600	1,600	800	4,000
Net Effect	(Dr.) (400)	(Cr.) 400	Nil	Nil

 

Journal Entry
Date	Particular	L.F.	Amt (₹)	Amt (₹)
2023
March 31	Anand’s Current A/c   ...Dr.		400	-
	To Ridhi’s Current A/c		-	400
	(Entry passed for adjustment of interest on capital.)