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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
Answer:- Adjusting Entry: Commission A/c …Dr. To Partner’s Current A/c Closing Entry: Profit and Loss Appropriation A/c …Dr. To Commission A/c
Guarantee of minimum profit means assurance to give a minimum amount of profit to a partner or partners. The guarantee may be given by one or some or all of the partners in the existing profit-sharing ratio or in an…
In the given situation following accounting, steps are taken by a partnership firm. Step 1: Calculate the expected profit on the business guaranteed by him. Step 2: The above profit (Calculated as per step 1) will be charged to the…
Answer:– Awdesh’s share of profit = ₹ 12,00,000 * 1/6 = ₹ 2,00,000 Guaranteed amount for half year = ₹ 3,00,000 * 6/12 = ₹ 1,50,000 Since the actual share of profit (₹ 2,00,000) exceeds the guaranteed amount, no deficiency…
Jiten’s share of Loss = ₹ 1,50,000 * 1/6 = ₹ 25,000 Guaranteed amount of profit for half year = ₹ 2,00,000 * 1/2 = ₹ 1,00,000 Deficiency = Guaranteed amount – (- ₹ 25,000) Deficiency = ₹ 1,00,000 –…
Answer:- Past adjustments refers to adjustments made to rectify the error of incorrect distribution of profits or error in respect of Interest on Capital/Drawings of a partner, salary or commission to a partner, sharing of profits.