In case the Partner’s Capital are fixed, in which account will the withdrawal of capital be recorded?
In the case of the Fixed Capital Method Withdrawal out of capital is recorded at the debit side of the Partner’s capital account.
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Answer
In the case of the Fixed Capital Method Withdrawal out of capital is recorded at the debit side of the Partner’s capital account.
Items at the debit side of Partner’s Fixed Capital Account 1. Withdrawal out of capital Journal Entries Partner’s Capital A/c To Bank A/c
Ans – Fluctuating Capital Method Under the Fluctuating Capital Method, the interest on the partner’s capital is recorded on the credit of side of the Partner’s Current Account.
The following are the reasons for allowing Interest on Capital: 1) When the Capitals of Partners are different but Profit Sharing Ratio is Equal:- If a partner invests more capital as compared to other partners and the profit-sharing ratio is…
Items that appear on the debit side of a Partner’s Current Account. 1) Drawings out of Profit by Partner’s 2) Interest on Drawings out of profit