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 following statement is correct regarding the transfer of interest on capital at the end of the year: a. The amount of RO 3600 debited to profit and loss appropriation account b. The amount of RO 3600 credited to profit and loss appropriation account c. The amount of RO 7200 debited to profit and loss appropriation account d. The amount of RO 7200 credited to profit and loss appropriation accoun
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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