Question

?) ILLUSTRATION 1
A and B start business on 1st January, 2016, with capitals of 30,000 and 20,000. According to the Parther
Deed, B is entitled to a salary of 500 per month and interest is to be allowed on capitals at 8% per annum
remaining profits are to be distributed amongst the partners in the ratio of 5:3. During 2016 the firm eamna
profit, before charging salary to B and interest on capital amounting to *25,000. During the year A withdre
8,000 and B withdrew 10,000 for domestic purposes.
Give journal entries relating to division of profit.​

Answer 1

Answer:

profit = 25,000

less :-> salary 6000

less :-> interest (2400 + 1600) 4000

profit (divisible) = 25,000 - (6000 + 4000) = 15,000

A's share = 5/8 × 15,000 = 9375

B's share = 3/8 × 15,000 = 5625

profit and loss appropriation A/C...dr 15,000

to A's capital A/C.... 9375

to B's capital A/C.... 5625

Answer 2

Answer:

Journal entry:-

Partner appropriation a/c dr. 16000

To A's capital a/c 10000

To B's capital a/c 6000