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Multiple Choice Questions

Asha and Vipasha are equal partners with fixed capitals of rs5 00 000 and rs2 00 000 respectively Af...........

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Asha and Vipasha are equal partners with fixed capitals of rs5,00,000 and rs2,00,000 respectively. After closing the accounts for the year ending 31st March 2019 it was discovered that interest on capitals was provided @ 6% instead of 5% p.a. In the adjusting entry :

Asha will be debited by rs1,500 and Vipasha will be credited by rs1,500;

Asha will be credited by rs1,500 and Vipasha will be debited by rs1,500;

Asha will be debited by rs5,000 and Vipasha will be debited by rs2,000;

Asha will be credited by rs5,000 and Vipasha will be credited by rs2,000;

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Explanation:

- Asha's fixed capital is Rs 5,00,000, and Vipasha's is Rs 2,00,000.

- Interest should have been calculated at 5%, but 6% was used.

- Correct interest for Asha at 5% should be Rs 25,000; instead, Rs 30,000 was provided.

- Correct interest for Vipasha at 5% should be Rs 10,000; instead, Rs 12,000 was given.

- Asha was over-credited by Rs 5,000, and Vipasha by Rs 2,000.

Your Options:

- Option 1: Incorrectly applies debits and credits.

- Option 2: Incorrect adjustments.

- Option 3: Correctly debits the excess amounts provided.

- Option 4: Reverses the required action.

Correct Answer: Option 3: Asha will be debited by Rs 5,000 and Vipasha will be debited by Rs 2,000.

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