1.

Azad and Benny are equal partners. Their capitals are ₹ 40,000 and ₹ 80,000 respectively. After the accounts for the year have been prepared, it is discovered that interest @ 5% p.a. as provided in the partnership agreement has not been credited to the Capital Accounts before distribution of profits. It is decided t make an adjustment entry in the beginning of the next year. Record the necessary journal entry.

Answer»

essary journal entry are calculated below:EXPLANATION:Given,AZAD and Benny's capitals are ₹ 40,000 and ₹ 80,000 respectivelyThe INTEREST @ 5% p.a has not been credited to the Capital Accounts. Calculation of Interests:Azad's Interest Benny's capitalThus, their total interest is (2000+4000) i.e., Rs. 6000Here, the profit has been wrongly distributed as Rs. 3000 each.Calculation of Profit Sharing:Azad = Rs. 2000 - Rs. 3000 = - Rs. 1000Benny = Rs. 4000 - Rs. 3000 = Rs. 1000Thus, an AMOUNT of Rs. 1000 has been credited to Benny's capital account from Azad's account.



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