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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
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 a net profit of ₹6,00,000 for the year ended 31st March, 2025. Pass the Journal entry for interest on capital and prepare the Profit & Loss Appropriation Account.
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2025 Mar 31 | Profit & Loss Appropriation A/c Dr. | 1,00,000 | ||
| To Kamal’s Current A/c | 52,500 | |||
| To Kapil’s Current A/c | 47,500 | |||
| (Interest on capital transferred to Profit & Loss Appropriation A/c) |
Profit & Loss Appropriation Account (for the year ended 31st March, 2025)
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Interest on Capital: | By Profit & Loss A/c (Net Profit) | 6,00,000 | |
| Kamal’s Current A/c | 52,500 | ||
| Kapil’s Current A/c | 47,500 | ||
| To Profit transferred to Current A/cs: | |||
| Kamal | 2,50,000 | ||
| Kapil | 2,50,000 | ||
| Total | 6,00,000 | Total | 6,00,000 |
Working Note – Interest on Capital:
Kamal = (5,00,000 × 10% × 9/12) + (6,00,000 × 10% × 3/12) = ₹37,500 + ₹15,000 = ₹52,500.
Kapil = (5,00,000 × 10% × 9/12) + (4,00,000 × 10% × 3/12) = ₹37,500 + ₹10,000 = ₹47,500.
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.21 - 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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