Question
21:
Kamal and Kapil are partners having fixed capitals of `
5,00,000 each as on 1st April, 2024. Kamal introduced
further capital of ` 1,00,000 on
1st January, 2025 whereas Kapil withdrew ` 1,00,000 on 1st January, 2025 out of
capital.
Interest on capital is to be allowed @ 10% p.a.
The firm earned net profit of
`
6,00,000 for the year ended 31st March 2025.
Pass the Journal entry for interest on capital and prepare Profit and Loss
Appropriation Account.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ( `) |
Credit ( `) |
|
|
2025 |
|
|
|
|
|
|
March 31 |
Profit & Loss Appropriation A/c |
Dr. |
|
1,00,000 |
|
|
|
To Kamal’s
Current A/c |
|
|
|
55,000 |
|
|
To Kapil’s
Current A/c |
|
|
|
45,000 |
|
|
(Interest on capital transferred to Profit & Loss
Appropriation A/c) |
|
|
|
|
|
Profit and Loss Appropriation Account for the year ended 31 March 2025 |
||||
|
Dr. |
|
|
Cr. |
|
|
Particulars |
( `) |
Particulars |
( `) |
|
|
Interest on Capital
A/c: |
|
Profit and Loss A/c |
6,00,000 |
|
|
Kamal’s Current A/c |
52,500 |
|
|
|
|
Kapil’s Current A/c |
47,500 |
1,00,000 |
|
|
|
Profit transferred
to: |
|
|
|
|
|
Kamal’s Current A/c |
2,50,000 |
|
|
|
|
Kapil’s Current A/c |
2,50,000 |
5,00,000 |
|
|
|
|
6,00,000 |
|
6,00,000 |
|
|
|
|
|
|
|
Working
Notes:
WN1: Calculation of Interest on Capital:
Kamal
= (5,00,000×10÷100×9÷12) + (6,00,000×10÷100×3÷12) = `. 52,500
Kapil=(5,00,000×10÷100×9÷12)+
(4,00,000×10÷100×3÷12) = `. 47,500
Question
22:
Simran and
Reema are partners sharing profits in the ratio of 3 : 2. Their capitals as on 1st April, 2024 were ` 2,00,000
each whereas Current Accounts had balances of
` 50,000 and ` 25,000 respectively interest is to be
allowed @ 5% p.a. on balances in Capital Accounts. Net profit for the firm for
the year ended for the year ended 31st March 2025 was `
3,00,000.
Pass the Journal entries for allowing interest on capital and distribution of
profit. Also prepare Profit and Loss Appropriation Account for the year.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ( `) |
Credit ( `) |
|
|
|
Interest on capital A/c |
Dr. |
|
20,000 |
|
|
To Simran’s Current A/c |
10,000 |
||||
|
To Reema’s Current A/c |
10,000 |
||||
|
(Being interest on Capital allowed) |
|||||
|
Profit & Loss Appropriation A/c |
Dr. |
20,000 |
|||
|
Interest on Capital A/c |
20,000 |
||||
|
(Being interest transferred to profit
and loss appropriation account) |
|||||
|
Alternative
Jornal entry |
|||||
|
Profit & Loss Appropriation A/c |
Dr. |
|
20,000 |
||
|
|
To Simran’s Current A/c |
|
|
|
10,000 |
|
|
To Reema’s Current A/c |
|
|
|
10,000 |
|
|
(Interest on capital transferred to
Profit & Loss Appropriation A/c) |
|
|
|
|
|
|
Profit & Loss Appropriation A/c |
|
|
2,80,000 |
|
|
|
To Simran’s Current A/c |
|
|
|
1,68,000 |
|
|
To Reema’s Current A/c |
|
|
|
1,12,000 |
|
|
(Profit transferred to Partners’
Current A/c) |
|
|
|
|
|
Profit
and Loss Appropriation Account for the
year ended 31 March 2025 |
||||
|
Dr. |
|
|
Cr. |
|
|
Particulars |
( `) |
Particulars |
( `) |
|
|
Interest on Capital A/c: |
|
Profit and Loss A/c |
3,00,000 |
|
|
Simran’s Current A/c |
10,000 |
|
|
|
|
Reema’s Current A/c |
10,000 |
20,000 |
|
|
|
Profit transferred to: |
|
|
|
|
|
Simran’s Current A/c |
1,68,000 |
|
|
|
|
Reema’s Current A/c |
1,12,000 |
2,80,000 |
|
|
|
|
3,00,000 |
|
3,00,000 |
|
|
|
|
|
|
|
Working
Notes:
WN1: Calculation of Interest on
Capital
Simran's Interest on Capital = 2,00,000×5÷100=` 10,000
Reema's Interest on Capital = 2,00,000×5÷100=` 10,000
Question
23:
Anita and Ankita are partners sharing profits equally. Their
capitals, maintained following Fluctuating Capital Accounts Method, as on 1st
April, 2024 were ` 5,00,000 and ` 4,00,000 respectively. Partnership
Deed provided to allow interest on capital @ 10% p.a. The firm earned net
profit of ` 2,00,000 for
the year ended 31st March, 2025.
Pass the Journal entry for interest on capital.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ( `) |
Credit ( `) |
|
|
2025 |
|
|
|
|
|
|
March 31 |
Profit & Loss Appropriation A/c |
Dr. |
|
90,000 |
|
|
|
To Anita’s Capital A/c |
|
|
|
50,000 |
|
|
To Ankita’s
Capital A/c |
|
|
|
40,000 |
|
|
(Interest on capital transferred to Profit & Loss
Appropriation A/c) |
|
|
|
|
Working
Notes:
WN1: Calculation of Interest on
Capital
Anita's Interest on Capital = 5,00,000×10÷100=` 50,000
Ankita's Interest on Capital = 4,00,000×10÷100=` 40,000
Question
24:
Ashish and Aakash are partners sharing profit in the ratio of 3 : 2. Their Capital Accounts showed a credit balance
of ` 5,00,000 and ` 6,00,000 respectively as on 31st
March, 2025 after debit of drawings during the year of ` 1,50,000 and ` 1,00,000 respectively. Net profit
for the year ended 31st March, 2025 was ` 5,00,000.
Interest on capital is to be allowed @ 10% p.a.
Pass the Journal entry for interest on capital and prepare Profit and Loss
Appropriation Account.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ( `) |
Credit ( `) |
|
|
2025 |
|
|
|
|
|
|
March 31 |
Profit & Loss Appropriation A/c |
Dr. |
|
1,35,000 |
|
|
|
To Ashish’s
Capital A/c |
|
|
|
65,000 |
|
|
To Aakash’s
Capital A/c |
|
|
|
70,000 |
|
|
(Interest on capital transferred to Profit & Loss
Appropriation A/c) |
|
|
|
|
|
|
|
|
|
3,65,000 |
|
|
|
Profit & Loss Appropriation A/c |
|
|
|
2,19,000 |
|
|
To Ashish’s
Capital A/c |
|
|
|
1,46,000 |
|
|
To Akash’s
Capital A/c |
|
|
|
|
|
|
(Profit transferred to Partners’ Capital A/c) |
|
|
|
|
|
|
|
|
|
|
|
|
Profit and Loss Appropriation
Account for the year ended 31 March
2025 |
|||||
|
Dr. |
|
|
Cr. |
||
|
Particulars |
( `) |
Particulars |
( `) |
||
|
Interest on Capital A/c: |
|
Profit and Loss A/c |
5,00,000 |
||
|
Ashish |
65,000 |
|
|
|
|
|
Aakash |
70,000 |
1,35,000 |
|
|
|
|
Profit transferred to: |
|
|
|
||
|
Ashish’s Capital A/c |
2,19,000 |
|
|
|
|
|
Aakash’s Capital A/c |
1,46,000 |
3,65,000 |
|
|
|
|
|
5,00,000 |
|
5,00,000 |
||
|
|
|
|
|
||
Working
Notes:
WN1: Calculation of Opening Capital:
|
Particulars |
Ashish |
Aakash |
|
Capital at the end |
5,00,000 |
6,00,000 |
|
Add: Drawings made |
1,50,000 |
1,00,000 |
|
Capital at the beginning |
6,50,000 |
7,00,000 |
WN2: Calculation of Interest on
Capital
Ashish's Interest on Capital = 6,50,000×10/100=` 65,000
Aakash's Interest on Capital = 7,00,000×10/100=` 70,000
Question
25:
Naresh and Sukesh are partners with capitals of `
3,00,000 each as on 31st March, 2025. Naresh had withdrawn ` 50,000
against capital on 1st October, 2025 and also
` 1,00,000 besides the drawings
against capital. Sukesh also had drawings of ` 1,00,000.
Interest on capital is to be allowed @ 10% p.a.
Net profit for the year was ` 2,00,000, which is yet to be
distributed.
Pass the Journal entries for interest on capital and distribution of profit.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ( `) |
Credit ( `) |
|
|
2025 |
|
|
|
|
|
|
March 31 |
Profit & Loss Appropriation A/c |
Dr. |
|
82,500 |
|
|
|
To Naresh’s
Capital A/c |
|
|
|
42,500 |
|
|
To Sukesh’s
Capital A/c |
|
|
|
40,000 |
|
|
(Interest on capital transferred to Profit & Loss
Appropriation A/c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit & Loss Appropriation A/c |
Dr. |
|
1,17,500 |
|
|
|
To Naresh’s
Capital A/c |
|
|
|
58,750 |
|
|
To Sukesh’s
Capital A/c |
|
|
|
58,750 |
|
|
(Profit transferred to Partners’ Capital A/c) |
|
|
|
|
|
|
|
|
|
|
|
Working
Notes:
WN1: Calculation of Opening Capital:
|
Particulars |
Naresh |
Sukesh |
|
Capital at the end |
3,00,000 |
3,00,000 |
|
Add: Drawings out of capital |
50,000 |
- |
|
Add: Drawings against profit |
1,00,000 |
1,00,000 |
|
Capital at the beginning |
4,50,000 |
4,00,000 |
WN2: Calculation of Interest on Capital
Naresh=(4,50,000×10×6/100×12)+(4,00,000×10×6/100×12)=` 42,500
Sukesh=4,00,000×10/100=` 40,000