Question

Vinod and Komal are partners in a firm, sharing profits in the ratio of 2 : 3. Their fixed capitals were 2,40,000 and 2,60,000 respectively. On 31st March, 2024, after closing the books it was found that Interest on Capital @ 10% per annum was omitted. Record the Adjustment Entry.

Answer 1

Calculate the interest on Vinod's capital: 

Interest = 10% of 2,40,000 = 0.10 x 2,40,000 = 24,000.

Calculate the interest on Komal's capital: 

Interest = 10% of 2,60,000 = 0.10 x 2,60,000 = 26,000.

Total interest on capital = Interest for Vinod + Interest for Komal

= 24,000 + 26,000

= 50,000.

The adjustment entry is: Debit 'Interest on Capital' 50,000; Credit 'Vinod's Capital' 24,000; Credit 'Komal's Capital' 26,000.