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Kavita and Pradeep are partners, sharing profits in the ratio of 3 : 2. They employed Chandan as their manager, to whom they paid a salary of Rs 750 p.m. Chandan deposited Rs 20,000 on which interest is payable 9% p.a. At the end of 2017 (after the division of profit), it was decided that Chandan should be treated as partner w.e.f. Jan. 1, 2014 with 1/6 th share in profits. His deposit being considered as capital carrying interest 6% p.a. like capital of other partners. Firm’s profits after allowing interest on capital were as follows: Rs 2014 Profit 59,000 2015 Profit 62,000 2016 Loss (4,000) 2017 Profit 78,000 Record the necessary journal entries to give effect to the above. |
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Answer»
Kavita and Pradeep are partners, sharing profits in the ratio of 3 : 2. They employed Chandan as their manager, to whom they paid a salary of Rs 750 p.m. Chandan deposited Rs 20,000 on which interest is payable 9% p.a. At the end of 2017 (after the division of profit), it was decided that Chandan should be treated as partner w.e.f. Jan. 1, 2014 with 1/6 th share in profits. His deposit being considered as capital carrying interest 6% p.a. like capital of other partners. Firm’s profits after allowing interest on capital were as follows:
Record the necessary journal entries to give effect to the above. |
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