P, Q,R entered into partnership on 1 st april ,2018 to share profits and losses in the ratio of 12: 8:5. It was provided that in no case R's share in profit would not less than 30000 p.a The profits and losses for the year ended 31st march, were 2019 profit 120000 ; 2020 profit 180000 2021 loss 120000.
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Answers
Journal entry in the books of P,Q,R
Explanation:-
Profit and Loss as on 31st March 2019
• Profit and Loss A/c Dr. 1,20,000
To P's Capital A/c 57,600
To Q's Capital A/c 38,400
To R's Capital A/c 24,000
As the guaranteed amount to R is atleast 30,000 p.a. So, the difference amount (30,000 - 24,000) i.e 6,000 will be borne by other partners in the old ratio 12:8 as new ratio is not stated in the question.
R's Capital A/c Dr. 6,000
To P's Capital A/c 3,600
To Q's Capital A/c 2,400
Profit and Loss as on 31st March 2020
• Profit and Loss A/c Dr. 1,80,000
To P's Capital A/c 86,400
To Q's Capital A/c 57,600
To R's Capital A/c 36,000
Since the amount paid to R justify the guaranteed amount ....no other entry or adjustment needs to be made
Profit and Loss as on 31st March 2021
• P's Capital A/c Dr. 57,600
Q's Capital A/c Dr.38,400
R's Capital A/c Dr.24,000
To Profit and Loss A/c 1,20,000
As the guaranteed amount to R is atleast 30,000 p.a. So, the difference amount (30,000 + loss of 24,000) i.e 54,000 will be borne by other partners in the old ratio 12:8 as new ratio is not stated in the question.
R's Capital A/c Dr. 54,000
To P's Capital A/c 32,400
To Q's Capital A/c 21,600
Note: We can make combined entry for year 2019 and year 2021 too as per our wish...a different entry is for better understanding...
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