The partnership agreement between Maneesh and Girish provides that:(i) Profits will be shared equally;(ii) Maneesh will be allowed a salary of Rs. 400 p.m;(iii) Girish who manages the sales department will be allowed a commission equal to 10% of the net profits, after allowing Maneesh’s salary;(iv) 7% interest will be allowed on partner’s fixed capital;(v) 5% interest will be charged on partner’s annual drawings;(vi) The fixed capitals of Maneesh and Girish are Rs. 1,00,000 and Rs. 80,000,respectively. Their annual drawings were Rs. 16,000 and 14,000,respectively. The net profit for the year ending March 31, 2015 amountedto Rs. 40,000;Prepare firm’s Profit and Loss Appropriation Account.
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.
The partnership agreement between Maneesh and Girish provides that:
(i) Profits will be shared equally;
(ii) Maneesh will be allowed a salary of Rs. 400 p.m;
(iii) Girish who manages the sales department will be allowed a commission equal to 10% of the net profits, after allowing Maneesh’s salary;
(iv) 7% interest will be allowed on partner’s fixed capital;
(v) 5% interest will be charged on partner’s annual drawings;
(vi) The fixed capitals of Maneesh and Girish are Rs. 1,00,000 and Rs. 80,000,
respectively. Their annual drawings were Rs. 16,000 and 14,000,
respectively. The net profit for the year ending March 31, 2015 amounted
to Rs. 40,000;
Prepare firm’s
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