ILLUSTRATION 3. A and B are partners sharing profits in the ratio of 5 : 3. Following is the Balance Sheet of the Firm on 31-3-2015 : BALANCE SHEET as at 31-3-2015 Liabilities $ Assets Capital : A Drawings 80,000 20,000 5,000 3,000 92,000 A B В Other Assets 1,00,000 1,00,000 Profit for the year 2014-15 was $ 16,000 and was divided between the Partners as per agreed ratio, but interest on capital @ 5% p.a. and on drawings @ 6% was inadvertently omitted. Interest on drawings may be calculated on an average basis for 6 months. You are required to pass Journal Entry(ies)to make the adjustments in the Capital Accounts of A and В.
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.
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