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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.
Journal Entry
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Solution
| 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.) |
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