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Amar and Bimal entered into partnership on 1st April, 2017 contributing ₹ 1,50,000 and ₹ 2,50,000 respecitvely towards capital. The Partnership Deed provided for interest on capital @ 10% p.a. It also provided that Capital Accounts shall be maintained following Fixed Capital Accounts method. The firm earned net profit of ₹ 1,00,000 for the year ended 31st March 2018. Pass the Journal entry for interest on capital.

Answer»

entry on interest on capital is GIVEN below:Explanation:In case there is no agreement made on the interest rate, 6% PER annum interest is given as per the Partnership ACT, 1932.Amar’s contribution towards capital = Rs. 1,50,000Bimal’s contribution towards capital = Rs. 2,50,000According to their partnership deed, interest rate is given as 10% per annum. So, the calculation of interest on capital will be DONE as follows: -Amar’s Interest Bimal’s Interest Thus, the Amar and the Bimal's interest will be Rs. 15000 and Rs. 25000 respectively.



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