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A, B and C were partners. Their capital were Rs 30,000, Rs 20,000 and Rs 10,000 respectively. According to the partnership deed, they were entitled to an interest on capital at 5%. p.a. In addition, B was also entitled to draw a salary of Rs 500 per month. C was entitled to a commission of 5% on the profit after charging the interest on capital but before charging the salary payable to B. The net profit for the year was Rs 30,000 distributed in the ratio of their capitals without providing for any of the above adjustment. The profits were to be shared in the ratio of 2 : 2 : 1. Pass the required adjustment entry and show the working. |
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Answer» A, B and C were partners. Their capital were Rs 30,000, Rs 20,000 and Rs 10,000 respectively. According to the partnership deed, they were entitled to an interest on capital at 5%. p.a. In addition, B was also entitled to draw a salary of Rs 500 per month. C was entitled to a commission of 5% on the profit after charging the interest on capital but before charging the salary payable to B. The net profit for the year was Rs 30,000 distributed in the ratio of their capitals without providing for any of the above adjustment. The profits were to be shared in the ratio of 2 : 2 : 1. Pass the required adjustment entry and show the working. |
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