Student Community
Answer
In the absence of a partnership Deed, the deficiency arising out of guarantee of profit to a partner is borne by other partners in their old profit sharing ratio. For example:- There are 3 partners A, B and C sharing…
In Case of Fixed Capital Method. The interest on drawings are debited to partners current account. In the Fixed Capital Method, All Transactions of Revenue (Current) Nature are recorded in separate account called current account. Note:- Current transactions refers to…
Liability of partners is unlimited, i.e., Firm’s liabilities can be paid from their personal assets. Liability of Partners is unlimited. It means that partners are liable for firm’s debts individually and jointly with other partners. Net Private Assets of a…
A Partner (or partners) may be guaranteed minimum share of profit from the business. It is the minimum profit that the guaranteed partner (or Parnters0 will get. Thus, if the guaranteed partner’s share of profit is more than the guaranteed…
Average Month would be 12 + 3/2 = 7.5 Months For example A withdraw ₹ 2,000 at the begening of each quarter. The rate of interest @ 10% p.a. is charged on drawings. A’s interest on drawings would be as…
Average Months in case of drawings withdrawn at the beginning of each quarter. 12 + 3/2 = 7.5 Months. Interest on Amit’s drawing would be as follows:- 7000 * 4 * rate of interest * 7.5/12 =
The average Method to calculate interest on drawings is used in the following two conditions. a) The amount of drawings is uniform; and b) the time interval between the two drawings is also uniform.
The profit & Loss Appropriation Account is an extension of the Profit and Loss Account. Net Profit for the year, as per the Profit and Loss Account is transferred to the credit of the Profit & Loss Appropriation Account. It…
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