The partners of a firm distributed the profits for the year ended 31st March, 2003
75,000 in the ratio of 3 : 2 : 1. without providing for the following adjustments :
(i) A and B were entitled to a salary of 3,000 each per annum.
(ii) B was entitled to a commission of 5,000.
(iii) B and C had guaranteed a minimum profit of 30,000 p.a. to A.
(iv) Profits were to be shared in the ratio of 3 : 3 : 2.
Pass necessary journal entry for the above adjustments in the books of the firm.
Answers
Answer:
details A B C firm
profit taken (37,500) (25,000) (12,500) 75,000
salary 3000 3000 - (6000)
commission - 5000 (5000)
profit/loss 30,000 20,400 13,600 (64,000)
net effect (4500) 3400 1100 nil
entry :->
A's capital AC.... dr 4500
to B's capital AC 3400
to C's capital AC 1100
divisible profit = 75,000 - (6000+5000) = 64,000
A's share = 64,000×3/8 = 24,000
B's share = 64,000×3/8 = 24,000
C's share = 64,000×2/8 = 16,000
guaranteed to A = 30,000
deficiency = 30,000-24,000 = 6000
B and C would be borne in profit sharing ratio it is assumed = 6000 in 3:2 ---> 3600 by B and 2400 by C
A's share = 24,000 + 6000 = 30,000
B's share = 24,000 - 3600 = 20,400
C's share = 16,000 - 2400 = 13,600
Ans-
A cap ac Dr 12500
To b cap ac 6067
To c cap ac 6434
Explanation:
See in the pic
I have used an easy method...
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