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Answer:- Rent paid to a partner for the use of his premises is a charge against profit and thus, is treated as an expense of the firm to be debited to the Profit and Loss Account and credited to his…
Answer:- Interest on a Loan by the Partner is debited to the Profit and Loss Account since it is a charge against profit and credited to Partner’s Loan Account since it is a gain to a partner as a lender…
Answer:- Interest on Loan taken by a partner from the firm is debited to Partner’s Current Account since partner’s capitals are fixed and credited to Profit and Loss Account since it is a gain to a firm.
Partner’s Loan Account is an account to which loan given by a partner and interest due thereon is credited Partner’s Capital Account is an account to which capital contributed by the partner is credited.
Answer:- a) Adjusting Entry: Concerned Partner’s Capital A/c …Dr. To Interest on Loan A/c ( Being the interest due on loan to partner) b) Closing Entry: Interest on Loan A/c …Dr. To Profit and Loss A/c
Solution:- Date Particulars Dr. (₹) March 31 Profit and Loss Appropriation A/c …Dr. To General Reserve A/c (Being 20% of the profit transferred to the General Reserve) 60,000 60,000
Answer:- When the Capitals are fixed, the Capital Account of a partner will not sow debit balance since all transactions, except those of capital, between the firm and the partner are shown in the current account.
Partners are charged interest on Drawings because drawings are made against anticipated share of profit for the year and share of profit becomes due at the end of the financial year.
Answer:- a) If the Partnership Deed provides for interest to be charged on drawings from the partners, it is charged at the rate of interest stated in the Partnership Deed. b) If firm does not have a Partnership Deed, interest…
Answer:- Adjusting Entry: Partner’s Current A/cs …Dr. To Interest on Drawings A/c Closing Entry: Interest on Drawings A/c …Dr. To Profit and Loss Appropriation A/c