Arun, Shobha and Yuvraj were partners in a firm on 1.4.2018 their fixed capital stood at Rs.1,00,000; Rs.50,000 and rs.50,000 respectively. As per the provision of the deed:
a. Partners were entitled to an annual salary of rs.20,000 each.
b. Interest on capital @10% p.a. was to be provided.
c. Profits were to be shared in the ratio of 3:1:1. Net profit for the year ended 31.3.2019 was Rs.90,000. Pass journal entries for the above in the books of the firm.
show adjustment table also
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Answer:
Arun, Shobha and Yuvraj were partners in a firm on 1.4.2018 their fixed capital stood at Rs.1,00,000; Rs.50,000 and rs.50,000 respectively. As per the provision of the deed:
a. Partners were entitled to an annual salary of rs.20,000 each.
b. Interest on capital @10% p.a. was to be provided.
c. Profits were to be shared in the ratio of 3:1:1. Net profit for the year ended 31.3.2019 was Rs.90,000. Pass journal entries for the above in the books of the firm.
show adjustment table alsoPROFIT AND LOSS APPROPRIATION A/C
(for the year ended 31st March, 2018)
Dr. Cr.
Particulars Amount Particulars Amount
To Salary to C 12000 By Net Profit a/c 172000
To Interest on Capital a/c
- A
- B
- C
5000
5000
10000
To Profit transferred to:
- A's Current a/c
- B's Current a/c
- C's Current a/c
50000
44000
46000
172000 172000
JOURNAL
1. Interest on Capital a/c..... Dr. 20000
To A's Current a/c 5000
To B's Current a/c 5000
To C's Current a/c 10000
(Being interest on capital transferred to the partner's current accounts)
2. Salary a/c.... Dr. 12000
To C's Current a/c 12000
(Being salary provided to C)
3. Profit and Loss Appropriation a/c.... Dr. 140000
To A's Current a/c 50000
To B's Current a/c
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