Mr. X, Mr. Y and Mr. Z are partners in a partnership firm XYZ sharing having capitals of Rs. 400,000, Rs. 600,000 and Rs. 80,000 respectively. Their partnership agreement is as follows. i. Interest is allowed @ 9% on their capitals ii. Salary to X Rs. 60,000 and Y Rs. 30,000 iii. Commission to Y Rs. 50,000 and Z Rs. 20,000 iv. Bonus to X Rs. 24,000 and Z Rs. 36,000 v. The reaming profit or loss is to be distributed in the ratio of their capital Net loss of the firm is Rs. 200,000 Required: Prepare income distribution summary and general 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. X, Mr. Y and Mr. Z are partners in a
capitals of Rs. 400,000, Rs. 600,000 and Rs. 80,000 respectively. Their
partnership agreement is as follows.
i. Interest is allowed @ 9% on their capitals
ii. Salary to X Rs. 60,000 and Y Rs. 30,000
iii. Commission to Y Rs. 50,000 and Z Rs. 20,000
iv. Bonus to X Rs. 24,000 and Z Rs. 36,000
v. The reaming profit or loss is to be distributed in the ratio of their capital
Net loss of the firm is Rs. 200,000
Required: Prepare income distribution summary and general
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