Question
In: Accounting
Imran , Irphan and Issa started a partnership firm on January 1 , 2019. They contributed...
Imran , Irphan and Issa started a partnership firm on January 1 ,
2019. They contributed RO 25,000 RO 20,000 and RO 15,000
respectively as their capitals and decided to share profits in the
ratio of 3 : 2 : 1 . The partnership deed provided that Imran is to
be paid salary of RO 500p.m. and Irphan is to be paid a commission
of RO 2,500 . It also provided that interest on capital be allowed
@ 8 % p.a. The drawings for the year were : Imran RO 3,000 , Irphan
RO 2,000 and Issa RO 500. Interest on drawings was charged @ S % to
all partners . The net amount of profit as per the profit and loss
account for the year ended 2019 was RO 35,660 . Required : Prepare
the necessary journal entries relating to Profit and Loss
Appropriation .
I want a clear solution on the computer
Solutions
Expert Solution
| Date | Particular | Debit | Credit |
| 31.12.2019 |
P/L account. Dr To. P/L appropriation account (Being net profit transfered to P/L appropriation account recorded) |
35660 | 35660 |
| 31.12.2019 |
P/L appropriation account ac. Dr To salary to partners account (Imran) (Being salary paid to Imran recorded) |
6000 | 6000 |
| 31.12.2019 |
P/L appropriation ac. Dr To commision to partner account(Irphan ) (Being commision paid to Irphan recorded) |
2500 | 2500 |
| 31.12.2019 |
P/L appropriation account Dr. To Interest on capital (Imran) To Interest on capital(Irphan ) To Interest on capital (Issa ) (Being interest on capital paid to partners recorded) |
4800 |
2000 1600 1200 |
| 31.12.2019 |
Interest on drawings (Imran) ac Dr Interest on drawings (Irphan ) ac. Dr Interest on Drawings (Essa) To P/L Appropriation ac ( Being interest on drawings recorded) |
150 100 25 |
275 |
| 31.12.2019 |
P/L appropriation account Dr To Imran capital account To Irphans capital account To Essa capital account (Being balance in p/l appropriation account distributed to partners capital in the profit sharing ratio recorded) |
22635 |
11317.5 7545 3772.5 |
1.Computation of interest on capital(8%)
Irphan= 25000*0.08=2000
Imran = 20000*0.08=1600
Essa =15000*0.08=1200
2. Computation of interest on drawings
Interest on drawings given in question is S% let us take this as 5%
Imran=3000*0.05=150
Irphan =2000*0.05 =100
Essa =500*0.05 =25
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