Mazin, Mansoor and Malik started a partnership firm on January 1, 2019. They contributed RO. 50,000, RO. 40,000 and RO. 30,000 respectively as their capitals and decided to share profits in the ratio of 3:2:1. The partnership deed provided that Mazin is to be paid salary of RO. 12000 p.a. and Mansoor commission of RO. 2,500 every 6 months. It also provided that interest on capital be allowed @ 6% p.a. The drawings for the year were: Mazin RO. 6,000, Mansoor RO. 4,000 and Malik RO. 2,000. Interest on drawings was RO. 270 for Mazin, RO.180 for Mansoor and RO. 90 for Malik. The net amount of profit as per the profit and loss account for the year ended 2019 was RO. 35,660. Identify which one of the following accounting entry for transfer of net profit at the end of the year: a. Dr: Profit and Loss Appropriation account RO 35660 Cr: Profit and Loss account Ro 35660 b. Dr: Profit and Loss account RO 35660 Cr: Partners' Capital Account RO 35660 c. Dr: Profit and Loss account RO 35660 Cr: Profit and Loss Appropriation account RO 35660 d. Dr: Partner's Capital Account RO 35660 Cr: Profit and Loss account RO 35660
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Mazin, Mansoor and Malik started a
Identify which one of the following accounting entry for transfer of net profit at the end of the year:
Dr: Profit and Loss Appropriation account RO 35660
Cr: Profit and Loss account Ro 35660
Dr: Profit and Loss account RO 35660
Cr: Partners' Capital Account RO 35660
Dr: Profit and Loss account RO 35660
Cr: Profit and Loss Appropriation account RO 35660
Dr: Partner's Capital Account RO 35660
Cr: Profit and Loss account RO 35660
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