Pass necessary rectifying journal entries for the following omissions committed while preparing Profit and Loss Appropriation Account. You are also required to show your workings clearly. (i) A, B and C were partners sharing profits and losses equally. Their fixed capitals were A Rs. 4,00,000; B Rs. 5,00,000 and C Rs. 6,00,000. The partnership deed provided that interest on partners’ capital will be allowed @ 10% per annum. The same was omitted. (ii) P, Q and R were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Their partnership deed provided that interest on partners’ drawings will be charged @ 18% p.a. Interest on the partners’ drawings was Rs. 1,000, Rs. 500 and Rs. 2,000 respectively. The same was omitted.
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.
Pass necessary rectifying
(i) A, B and C were partners sharing profits and losses equally. Their fixed capitals were A Rs. 4,00,000; B Rs. 5,00,000 and C Rs. 6,00,000. The partnership deed provided that interest on partners’ capital will be allowed @ 10% per annum. The same was omitted.
(ii) P, Q and R were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Their partnership deed provided that interest on partners’ drawings will be charged @ 18% p.a. Interest on the partners’ drawings was Rs. 1,000, Rs. 500 and Rs. 2,000 respectively. The same was omitted.
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