Sohail, Ali and Aryan are partners with fixed capitals of Rs. 160,000, Rs. 180,000 and Rs. 260,000 respectively. The partner agreement provides as under: Commission paid to Sohail Rs. 4000 per month. Salary is allowed to Ali Rs. 7000 quarterly. Interest on beginning partners is to be charged @ 14% per annum. Quarterly Bonus allowed to Aryan Rs. 4,000 Remaining profit to be distributed by 2:4:6. The income statement for the year ended December 31, 2010 showed a net profit of Rs. 550,000. Prepare the income statement distribution summary with working, and also record the 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.
Sohail, Ali and Aryan are partners with fixed capitals of Rs. 160,000, Rs. 180,000 and Rs. 260,000 respectively.
The partner agreement provides as under:
- Commission paid to Sohail Rs. 4000 per month.
- Salary is allowed to Ali Rs. 7000 quarterly.
- Interest on beginning partners is to be charged @ 14% per annum.
- Quarterly Bonus allowed to Aryan Rs. 4,000
- Remaining profit to be distributed by 2:4:6.
The income statement for the year ended December 31, 2010 showed a net profit of Rs. 550,000. Prepare the income statement distribution summary with working, and also record the necessary
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