Question

The firm of Sonu and Monu earned a profit of Rs 3,25,000 during the year ending
on 31" March, 2016. They have decided to donate 10% of this profit to an NGO
working for senior citizens. Pass necessary journal entry for the distribution of
profits.​

Answer 1

For journal entry see the attachment

Answer 2

The journal entry for the distribution of profit will be:

Profit and Loss a/c (3,25,000-32,500)       2,92,500

       To Sonu's Capital a/c                                          1,46,250

       To Monu's Capital a/c                                         1,46,250

(Being the profit transferred to capital account)

• The profit earned during the year is 3,25,000 out of which 10% of the profit is donated to an NGO (10% of 3,25,000 i.e 32,500) and the rest will be distributed among the partners (3,25,000-32,500).
• As no profit sharing ratio is given, the profit will be distributed in the ratio 1:1.