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P2 C5 Financial Statements of Business Organisations — Account STD 11 Commerce — Question

Gujarat BoardEnglish MediumSTD 11 CommerceAccountP2 C5 Financial Statements of Business Organisations3 Marks
Question
Pass adjustment entry for the following and also show its effect in final accounts: Proprietor's capital in the business is $Rs.3,00,000$ on which $12%$ interest is payable.
✓

Answer

Adjustment Entry: $12%$ Interest on capital $=3,00,000 \times \frac{12}{100}=$ $Rs. 36,000$
Date Particulars L.F. Debit(Rs.) Credit(Rs.)
  Interest on capital A/c Dr.   $36,000$  
  To Capital A/c     $36,000$
  (Being adjustment entry for interest on capital)      
           
• Effect in Final A/c.
Dr. Profit and Loss A/c of Shri ........... for the year ending ……… Cr.
Particulars Amt.(Rs.) Particulars Amt.(Rs.)
Interest on capital $36,000$    
           
Balance Sheet of Shri ............... as on ...........
Liabilities Amt.(Rs.) Assets Amt.(Rs.)
Capital $3,00,000$      
$+$ Int. on cap. $36,000$ $3,36,000$    

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