Mr. A and Mr. B start a business on 01st May,2021, with capital of 2,500,000 and 300,000. According to agreement Mr. A is entitled for a salary of 40,000 whereas another partner is entitled for 35,000. Mr. B gave a loan to the business and interest on capital is allowed 5% p.a. During their first fiscal year of partnership, they earned a net profit of Rs. 500000. Required: Profit and Loss appropriation account to allocate the profit and necessary journal entries
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.
Mr. A and Mr. B start a business on 01st May,2021, with capital of 2,500,000 and 300,000. According to agreement Mr. A is entitled for a salary of 40,000 whereas another partner is entitled for 35,000. Mr. B gave a loan to the business and interest on capital is allowed 5% p.a. During their first fiscal year of partnership, they earned a net profit of Rs. 500000.
Required:
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