Question

Mannan and Ramesh share profits and losses in the ratio of 3 : 2 and their capital on 1^st April, 2018 was Mannan ₹ 1,50,000 and Ramesh ₹ 1,00,000 respectively and their current accounts show a credit balance of ₹ 25,000 and ₹ 20,000 respectively. Calculate interest on capital at 6% p.a. for the year ending 31^st March, 2019 and show the journal entries.

Answer 1

Mannan	Ramesh
`1,50,000 xx 6/100` = 9000	`1,00,000 xx 6/100` = 6000

 

Interest on Capital

Mannan's Capital = 9,000

Ramesh's Capital = 6,000

 

Journal Entries
Interest on Capital A/c ....Dr. To Mannan's Capital A/c To Ramesh's Capital A/c (Interest on Capitål entered)	15,000 - -	- 9,000 6,000