Partners A, B and C started their partnership firm M/s. ABC LLC in Muscat with capitals of OMR 80,000; OMR 48,000 and OMR 40,000 respectively on 1.1.2019. They prepared Partnership Deed for the partnership and it contains the various clauses related to – the firm has to pay the partners @ 5.5 % p.a., for their capital contributed to the business and the partners have to pay @ 2.5% for their drawings taken from the business during the financial year. Further the firm has to pay salary to A @ OMR 600 per month, @ 10% commission to B and C and bonus to A and C @ OMR 500 each. Finally the firm’s Profit and Losses for the partners to be shared at the end the financial year Up to OMR 9,000 in the ratio of 4:3:2 and Above OMR 9,000 equally. The net profit earned by the firm during the year ended 31st December 2019 amounted to OMR 55,500. The partners were drawn the money from the firm during the financial year is - A OMR 4,800: B OMR 3,200 and C OMR 2,000. Prepare both Profit and Loss Appropriation Account and Fixed & Fluctuating Capital Accounts of the Partners in M/s. ABC LLC. On what basis the items which are debited and credited in that account – Comment. The balance of two different methods of capital accounts is differs from one another. Why? Explain it with the accurate values.
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.
Partners A, B and C started their partnership firm M/s. ABC LLC in Muscat with capitals of OMR
80,000; OMR 48,000 and OMR 40,000 respectively on 1.1.2019. They prepared Partnership Deed
for the partnership and it contains the various clauses related to – the firm has to pay the partners
@ 5.5 % p.a., for their capital contributed to the business and the partners have to pay @ 2.5% for
their drawings taken from the business during the financial year. Further the firm has to pay salary
to A @ OMR 600 per month, @ 10% commission to B and C and bonus to A and C @ OMR 500 each.
Finally the firm’s Profit and Losses for the partners to be shared at the end the financial year Up to
OMR 9,000 in the ratio of 4:3:2 and Above OMR 9,000 equally. The net profit earned by the firm
during the year ended 31st December 2019 amounted to OMR 55,500. The partners were drawn
the money from the firm during the financial year is - A OMR 4,800: B OMR 3,200 and C OMR 2,000.
Prepare both
Partners in M/s. ABC LLC. On what basis the items which are debited and credited in that account –
Comment. The balance of two different methods of capital accounts is differs from one another.
Why? Explain it with the accurate values.
Step by step
Solved in 5 steps with 3 images
