Multiple Choice Questions on A and B are partners sharing profits in 2 3 ratio having fixed capitals of rs3 00 000 and rs2 0........... for Commerce 12th Preparation

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Multiple Choice Questions

A and B are partners sharing profits in 2 3 ratio having fixed capitals of rs3 00 000 and rs2 0...........

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    A and B are partners sharing profits in 2 : 3 ratio, having fixed capitals of rs3,00,000 and rs2,00,000 respectively. After closing of books for the year 2018, the clerk realised that interest on capital was provided @ 6% p.a. instead of 8%. The amount of adjustment entry will be:

    rs2,000 

    Correct Answer

    rs6,000

    Incorrect Answer

    rs4,000

    Incorrect Answer

    None of these

    Incorrect Answer
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    Explanation:

    - Interest on Capital Adjustment: Originally calculated at 6% instead of the correct rate of 8%. Therefore, there's an under-calculation by 2%.

    - A's Capital Calculation: 2% of Rs 3,00,000 = Rs 6,000 (additional interest due).

    - B's Capital Calculation: 2% of Rs 2,00,000 = Rs 4,000 (additional interest due).

    - Total Additional Interest: Rs 6,000 (A) + Rs 4,000 (B) = Rs 10,000.

    This interest ( Rs 10,000)  was distributed in profit sharing ratio

     A'share = 10,000 x 2/5 = 4,000  alredy credited

    B's share = 10,000 x 3/5 = 6,000 alredy credited

    Adjustment entry amount

    A =  6,000 (actually to be credited) - 4,000 (alredy credited) = 2,000 Cr

    B=  4,000(actually to be credited) - 6,000 (alredy credited)= 2,000 Dr

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