Ques. 3 Anand, Rahul and Vijay are partners in a firm sharing profits and losses in the ratio3:2:1. Their fixed capital accounts are Rs 3,00,000, Rs 2,00,000 and Rs 1,00,000 respectively.Anand is entitled to salary of Rs 5,000 per month and Rahul is entitled to commission of Rs20,000. Interest on capital is provided at 10% per annum. Drawings made during the year byAnand, Rahul and Vijay are Rs 50,000, Rs 30,000 and Rs 20,000 respectively. Interest ondrawings is to be charged at 10% irrespective of the period. Net profit for the year is Rs4,00,000. Prepare the Profit and Loss Appropriation Account and Partners' Current Account.

Answered: Prepare the Profit and Loss…

Business

Accounting

Prepare the Profit and Loss Appropriation Account and Partners' Current Account.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: A.What is partnership accounts and what are the necessary components of partnership accounts that a…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Prior to the creation of a partnership, the sole proprietor must first re-evaluate or adjust its…

A: Re-evaluation or Adjustment in Assets or Liability: To determine whether or not there was a net gain…

Q: Recording of adjusting entries in partnership firm ensure that: a. The goodwill received by each…

A: Recording of adjustment entries in partnership firm is to ensure that the both revenue recognition…

Q: Which one of the following is a content of a partnership deed? a. Customers' list b. Names and…

A: Introduction: Partnership: Its an agreement between two or more partners for forming a business and…

Q: Show allocation of profit/loss among partners.

A: Calculaion of the total income (loss) from the partnership business as at 31st December…

Q: debit balance on his capital

A: In partnership there are two Types of Method of maintaining capital Account FIXED CAPITAL ACCOUNT…

Q: Reporting changes in partnership capital accounts is similar to reporting changes for

A: Partnership is an association of two or more persons who owns a business for profit. Profits or…

Q: briefly explain the concept of Partnership, Formation, Duties, Liabilities and Dissolution

A: PARTNERSHIP A partnership is a kind of business wherever a proper agreement between 2 or additional…

Q: Show the journal entry to record the initial capital investment made by a partner.

A: Partnership: It is a form of business where two or more individuals come together and carry out…

Q: Explain the effect of dissolution on the authority and liability of the partners and the order in…

A: Partnership according to section 3 (1) of the partnership act 1961 is known as the relation between…

Q: The amount taken from the business by the partners for their personal use is called: a.Interest on…

A: The amount taken from the business by the partners for their personal use is called Drawings..Option…

Q: Which of the following statements correctly gives the account to be debited and the account to be…

A: Partnership: Partnership is a form of business organization in which two or more individuals come…

Q: What journal entry is passed when a partner agrees to pay the realization expenses on the behalf of…

A: Realization account: A realization account is prepared at the time of dissolution of a firm. The…

Q: What is a summary of the changes in each partner's capital in a partnership that have occurred…

A: Financial statements: These imply to the written records that are maintained by the business related…

Q: Discuss the possibility for a post-closing debit balance in a partner’s capital account.

A: An help's obligations and commitment upon disintegration depict what the feat accomplice owes to the…

Q: What is the purpose of a drawing account in a partnership’s financial records?

A: Partnership: This is the form of business entity which is formed by an agreement, owned and managed…

Q: After liquidating all property and paying partnership obligations, what is the basis for allocating…

A: Partnership: A partnership is an unincorporated form of business which is formed by an agreement,…

Q: Prepare journal entries to record the acquisition by a new partner of either all or a portion of a…

A: Admission of a new partner A partnership firm after an agreement with the existing partners may…

Q: Discuss further on liabilities of partners and share your thoughts on the issues alone.

A: In case of partnership firm partners shall be liable for partnership liabilities.

Q: Which one of the following will be added to the current liabilities in the balance sheet? a.…

A: Answer: Current liabilities are the liabilities which are expected to be cleared off within the…

Q: Distinguish between admission of a new partner to a partnership (a) via the acquisition of an…

A: Introduction: Partnership: It is a type of business that is owned and managed by two or more people…

Q: Describe the financial statements and journal entries utilized to account for estate and trust…

Q: Distinguish between the liability of incoming partner for debts arising before his admission and…

A: A partnership is a legally enforceable agreement between two or more people to manage and operate a…

Q: 21. The purpose of preparation of Profit and loss appropriation account is: a. To know the balance…

A: Answer - P&L Appropriation Account is basically prepared to show the appropriation or…

Q: Example of Family financial positions with identified assets,liabilities and owner's equity.

A: Financial statements are the report which is prepared and maintained by a business to find out their…

Q: In admitting new partners, assets contributed by partners are recorded at their replacement value.…

A: Partnership is an agreement between two or more than two persons, in which they invest capital, run…

Question

Ques. 3 Anand, Rahul and Vijay are partners in a firm sharing profits and losses in the ratio
3:2:1. Their fixed capital accounts are Rs 3,00,000, Rs 2,00,000 and Rs 1,00,000 respectively.
Anand is entitled to salary of Rs 5,000 per month and Rahul is entitled to commission of Rs
20,000. Interest on capital is provided at 10% per annum. Drawings made during the year by
Anand, Rahul and Vijay are Rs 50,000, Rs 30,000 and Rs 20,000 respectively. Interest on
drawings is to be charged at 10% irrespective of the period. Net profit for the year is Rs
4,00,000. Prepare the Profit and Loss Appropriation Account and Partners' Current Account.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

List down the adjusted assets and liabilities of each partner to determine partner's capital.
Keeping the partnership assets and liabilities separated from the personal assets and liabilities of the individual partners is part of marshaling of assets .
If the personal assets of the partners are exposed to the business debts, it is called? O a. Mutual Agency O b. Limited life O c. Unlimited Liability o d. Co-ownership of property
. How are “advances or drawings of money or property against a partner’s distributive share of income” treated?
Why is it important to state all partnership assets in terms of current prices at the time of the admission of a new partner?
State the method to determine the amounts to be paid to partners in a liquidation.
When accounts receivables are transferred into a partnership, at what amount should they be recorded? Include a definition of Accounts Receivable in your response.
The book states "a partnership balance sheet is a document that is used to keep track of the relationship of the partnership to the partners and the partners to each other, both from a tax perspective and a economic perspective." What is meant by economic perspective (focus at point of formation)?
List the priority of claims for the distribution of a liquidatedfirm’s assets.
Write the word or group of words that identify each of the following statements. 7. A partnership organized for the purpose of rendering service. 8. A contract whereby two or more persons bind themselves to contribute money, property, or industry to a common fund with the intention of dividing profits among themselves. 9. The basis for recording a partner's contribution in the form of noncash assets
Prepare journal entries to record the withdrawal of a current partner.