. S and M were partners in a firm sharing profits in the ratio of 3:2.Their fixed capitals were: S Rs.9,00,000 and M Rs.6,00,000.The partnership deed provided for the following: (i) Interest on capital @ 5%p.a. (ii) Rs.60,000 per annum salary to S and salary Rs. 2000 per month to M. The profit earned by the firm for the year ended 31-3-2018 was Rs. 2,34,000. The profits were divided equally without providing for the above. Pass adjustment entry.
Answers
Explanation:
ANSWER
Profit And Loss Account
Particulars Amount Particulars Amount
To Manager;s
commission
(15000*5/100) 750 By profit before B's Salary
(12500+2500) 15000
To Net profit T/f to
P/L Appropriation
Account 14250
Total 15000 Total 15000
Profit And Loss Appropriation Account
Particulars Amount Particulars Amount
To Interest on capital
A = 50000*6% = 3000
B=30000*6% = 1800 4800 By net profit 14250
B's Salary 2500
To profit T/f to
A's Capital A/c = 4170
B's Capital A/c = 2780 6950
Total 14250 Total 14250
Partners capital account
Particulars A B Particulars A B
By bal b/d 50000 30000
By Int on capital 3000 1800
salary 2500
To bal c/d 57170 37080 By P/L Appr A/c 4170 2780
Total 57170 37080 Total 57170 37080