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‏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

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Expert Solution

Journal entries related to profit and loss appropriation account.
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

ekkarill92 answered 2 years ago
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