Plz explain this entry with accounting rules
Dear Student
(a)
In (a) entry interest on capital is debited because its an expense (Debit all the losses and expenses - nominal account) for the business and partner's capital A/c credited because here partner is receiver of that interest on capital (credit the receiver - personal account).
(b)
In (b) entry, Profit & loss appropriation A/c is debited because interest on capital is charged from P& L Appropriation A/c. and for closing interest on capital in this entry we credit it.
Regards
(a)
| Date | Particulars | Amount (Dr) | Amount (Cr) |
| Interest on capital A/c Dr | -- | ||
| To Partner's capital A/c | -- |
In (a) entry interest on capital is debited because its an expense (Debit all the losses and expenses - nominal account) for the business and partner's capital A/c credited because here partner is receiver of that interest on capital (credit the receiver - personal account).
(b)
| Date | Particulars | Amount (Dr) | Amount (Cr) |
| Profit & loss appropriation A/c Dr | -- | ||
| To Interest on capital A/c | -- |
In (b) entry, Profit & loss appropriation A/c is debited because interest on capital is charged from P& L Appropriation A/c. and for closing interest on capital in this entry we credit it.
Regards