Question

Please answer 3rd question
Step by step explanation

Answer 1

If the partnership deed provides for the payment of interest on capital,then it should be paid to the partners in case of profits.

P and Q are entitled to interest on their capital contribution @ 12% per annum.

The adjustment entry should be:-

Profit and Loss Appropriation A/c Dr 72,000

To P's Current A/c 36,000

To Q's Current A/c , 36,000

(Being the interest on capital paid to P and Q @12%p.a)