Azad and Benny are Equal Partners. Their Capitals are Rs 40,000 and Rs 80,000, respectively - Bzziii.com

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



Calculations for Interest on Capital

Azad = Rs. 40,000 `\times` `5/100`

= Rs 2,000

Benny = Rs. 80,000 `\times` `5/100`

= Rs 4,000

 AzadBennyTotal
Interest on Capital2,0004,0006,000
Less: Wrong distribution of Profit Rs 6,000(3,000)(3,000)(6,000)
Adjusted Profit(1,000)(1,000)X

Journal

Date  ParticularsL.FAmountAmount
 Azad’s Current  A/c
   To Benny’s Current A/c
(Adjustment of profit made)
Dr. 1,0001000


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