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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Amit and Sumit entered into partnership on 1st April, 2024 contributing ₹1,50,000 and ₹2,50,000 respectively towards capital. The Partnership Deed provided for interest on capital @ 10% p.a. It also provided that Capital Accounts shall be maintained following the Fixed Capital Accounts method. The firm earned a net profit of ₹1,00,000 for the year ended 31st March, 2025. Pass the Journal entry for interest on capital.
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2025 Mar 31 | Interest on Capital A/c Dr. | 40,000 | ||
| To Amit’s Current A/c | 15,000 | |||
| To Sumit’s Current A/c | 25,000 | |||
| (Interest on capital allowed @ 10% p.a.) | ||||
| 2025 Mar 31 | Profit & Loss Appropriation A/c Dr. | 40,000 | ||
| To Interest on Capital A/c | 40,000 | |||
| (Interest on capital transferred to Profit & Loss Appropriation A/c) |
Working Note: Interest on capital – Amit = ₹1,50,000 × 10% = ₹15,000; Sumit = ₹2,50,000 × 10% = ₹25,000. As capitals are fixed, interest is credited to the partners’ Current Accounts.
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Chapter 1 Q.20 - Accounting for Partnership Firm Fundamentals", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 1 - Accounting for Partnership Firm – Fundamentals.
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