jyoti ans ashish are partners in a firm sharing profits and losses in the ratio of 3:2. The balances of capitals as on 1st January 2006 were jyoti Rs 2,00,000 and ashish 1,60,000. The terms of partnerships deed provide for the following:
1. The partners will be paid interest on their capital @15% pa.
2. every partner to get a salary of Rs 4000 pm.
Answers
Explanation:
ANSWER
Profit and Loss Appropriation Account
Interest on capital
Ashish = 50,000
Aakash = 60,000 1,10,000 Net Profit 5,00,000
Share of profits
Ashish = 2,43,000
Aakash = 1,62,000 405000 Interest on Drawings
Ashish = 1,50,000*6% = 9,000
Aakash = 1,00,000*6% = 6,000 15,000
Total 5,15,000 Total 5,15,000
Journal Entry for Interest on Capital
Profit and Loss Appropriation Account Dr. 1,10,000
To Ashish Capital A/c 50,000
To Aakash Capital A/c 60,000
(Being Interest on capital credited to partner's capital account)
Assuming that partnership deed exist and it contains provision regarding charge of interest on drawings @ 6%p.a.