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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Anita and Ankita are partners sharing profits equally. Their capitals, maintained following the Fluctuating Capital Accounts Method, as on 1st April, 2024 were ₹5,00,000 and ₹4,00,000 respectively. The Partnership Deed provided to allow interest on capital @ 10% p.a. The firm earned a net profit of ₹2,00,000 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. | 90,000 | ||
| To Anita’s Capital A/c | 50,000 | |||
| To Ankita’s Capital A/c | 40,000 | |||
| (Interest on capital allowed @ 10% p.a.) | ||||
| 2025 Mar 31 | Profit & Loss Appropriation A/c Dr. | 90,000 | ||
| To Interest on Capital A/c | 90,000 | |||
| (Interest on capital transferred to Profit & Loss Appropriation A/c) |
Working Note: Interest on capital – Anita = ₹5,00,000 × 10% = ₹50,000; Ankita = ₹4,00,000 × 10% = ₹40,000. As capitals are fluctuating, interest is credited to the partners’ Capital Accounts. Profit (₹2,00,000) is sufficient to allow full interest.
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This guide covers "T.S. Grewal Class 12 Chapter 1 Q.23 - 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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