X, Y and Z were partners sharing profits and losses in the ratio 2: 2 :1. Their respective capital balances on 31.12.2014 were $ 5,00,000, $ 6,00,000 and $ 4,00,000 respectively. After closing the accounts for the year 2014, it was discovered that salaries of $ 20,000 p.a. to X and $ 30,000 to Z were ommited before distributing the profit. Profits for the year 2014 were $ 5,00,000 and the same have already been credited to their capital accounts. Instead of changing the audited Balance sheet, it was decided to pass a single adjusting entry in the beginning of the year 2015, so that accounts of previous year can be rectified.

X, Y and Z were partners sharing profits and losses in the ratio 2: 2 :1. Their respective capital balances on 31.12.2014 were $ 5,00,000, $ 6,00,000 and $ 4,00,000 respectively. After closing the accounts for the year 2014, it was discovered that salaries of $ 20,000 p.a. to X and $ 30,000 to Z were ommited before distributing the profit. Profits for the year 2014 were $ 5,00,000 and the same have already been credited to their capital accounts. Instead of changing the audited Balance sheet, it was decided to pass a single adjusting entry in the beginning of the year 2015, so that accounts of previous year can be rectified.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter12: Accounting For Partnerships And Limited Liability Companies

Section: Chapter Questions

Problem 3PA

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