Question

Ram, Shyam and Mohan
are partners in the ratio of 5.3.2
Before Shyam's salary of Rs.
17000 firm's profits is Rs.
97000. How much in total
Shyam will receive from the
firm.
0 (a) Rs. 17.000
0 (b) Rs. 40,000
0 (c) Rs 24,000
0 (d) Rs. 41.000​

Answer 1

As the partners capital are fixed,we have to pass entry for additional 1% through current Account.
The following entries should be passes:-
Profit and Loss Appropriation A/c Dr. 6000
To Interest on Capital A/c 6000
(Interest of additional 1% debited to P&L Appropriation Account)

Interest On capital A/c Dr. 6000
To Ram's Current A/c 3000
To Shyam's Current A/c 1000
To Mohan's Current A/c 2000
(Being interest credited to Current account of partners)

Profit and Loss Appropriation A/c Dr (Notes) 1,90,000
To Ram's Current A/c 76,000
To Shyam's Current A/c 38,000
To Mohan's Current A/c 76,000
(Being profits distributed to partners)

Notes: Profit before Interest = 2,50.000
Less:Interest on Capital = (60,000)
Profit after interest = 1,90,000