Commerce Exam > Commerce Questions > A and B started a business on 1⁰ April, 2016 ...
Start Learning for Free
A and B started a business on 1⁰ April, 2016 with capitals of Rs. 3,00,000 and Rs. 2,00,000 and interest is to be allowed on capitals @ 6% p.a. Profit sharing ratio between the two respectively. According to the Partnership Deed, B is entitled to salary of Rs.5,000 per month partners is 5:3. During the year, the firm earned a profit of Rs. 2,50,000. Pass Journal entries for division of profits. The firm closes its accounts on 31st March every year.?
Most Upvoted Answer
A and B started a business on 1⁰ April, 2016 with capitals of Rs. 3,00...
Journal Entries for Division of Profit in a Partnership Firm
The following are the journal entries that need to be passed for division of profit in a partnership firm:
1. Interest on Capital
A and B are entitled to receive interest on their capitals at the rate of 6% p.a. The journal entry for the same is:
Interest on A's Capital Account Dr. 18,000
Interest on B's Capital Account Dr. 12,000
To A's Capital Account 18,000
To B's Capital Account 12,000
2. Salary to B
As per the partnership deed, B is entitled to a salary of Rs. 5,000 per month. The journal entry for the same is:
Salary to B Account Dr. 60,000
To B's Capital Account 60,000
3. Profit Sharing Ratio
The profit earned by the firm is to be shared between A and B in the ratio of 5:3. The journal entry for the same is:
Profit and Loss Account Dr. 2,50,000
To A's Capital Account 1,50,000
To B's Capital Account 90,000
To General Reserve Account 10,000
Explanation
The above journal entries represent the division of profit in a partnership firm. The first entry represents the interest on capital that is to be paid to A and B based on their respective capital contributions. The second entry represents the salary to be paid to B as per the partnership deed. The third entry represents the division of profit between A and B in the ratio of 5:3.
The profit and loss account is debited with the total profit earned by the firm during the year. The profit is then divided between A and B based on their profit sharing ratio. A's capital account is credited with his share of profit, and B's capital account is credited with his share of profit and salary.
Finally, a portion of the profit is transferred to the general reserve account to provide for future contingencies and business expansion.
The following are the journal entries that need to be passed for division of profit in a partnership firm:
1. Interest on Capital
A and B are entitled to receive interest on their capitals at the rate of 6% p.a. The journal entry for the same is:
Interest on A's Capital Account Dr. 18,000
Interest on B's Capital Account Dr. 12,000
To A's Capital Account 18,000
To B's Capital Account 12,000
2. Salary to B
As per the partnership deed, B is entitled to a salary of Rs. 5,000 per month. The journal entry for the same is:
Salary to B Account Dr. 60,000
To B's Capital Account 60,000
3. Profit Sharing Ratio
The profit earned by the firm is to be shared between A and B in the ratio of 5:3. The journal entry for the same is:
Profit and Loss Account Dr. 2,50,000
To A's Capital Account 1,50,000
To B's Capital Account 90,000
To General Reserve Account 10,000
Explanation
The above journal entries represent the division of profit in a partnership firm. The first entry represents the interest on capital that is to be paid to A and B based on their respective capital contributions. The second entry represents the salary to be paid to B as per the partnership deed. The third entry represents the division of profit between A and B in the ratio of 5:3.
The profit and loss account is debited with the total profit earned by the firm during the year. The profit is then divided between A and B based on their profit sharing ratio. A's capital account is credited with his share of profit, and B's capital account is credited with his share of profit and salary.
Finally, a portion of the profit is transferred to the general reserve account to provide for future contingencies and business expansion.
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
|
Explore Courses for Commerce exam
|
|
Similar Commerce Doubts
Top Courses for CommerceView all
A and B started a business on 1⁰ April, 2016 with capitals of Rs. 3,00,000 and Rs. 2,00,000 and interest is to be allowed on capitals @ 6% p.a. Profit sharing ratio between the two respectively. According to the Partnership Deed, B is entitled to salary of Rs.5,000 per month partners is 5:3. During the year, the firm earned a profit of Rs. 2,50,000. Pass Journal entries for division of profits. The firm closes its accounts on 31st March every year.?
Question Description
A and B started a business on 1⁰ April, 2016 with capitals of Rs. 3,00,000 and Rs. 2,00,000 and interest is to be allowed on capitals @ 6% p.a. Profit sharing ratio between the two respectively. According to the Partnership Deed, B is entitled to salary of Rs.5,000 per month partners is 5:3. During the year, the firm earned a profit of Rs. 2,50,000. Pass Journal entries for division of profits. The firm closes its accounts on 31st March every year.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A and B started a business on 1⁰ April, 2016 with capitals of Rs. 3,00,000 and Rs. 2,00,000 and interest is to be allowed on capitals @ 6% p.a. Profit sharing ratio between the two respectively. According to the Partnership Deed, B is entitled to salary of Rs.5,000 per month partners is 5:3. During the year, the firm earned a profit of Rs. 2,50,000. Pass Journal entries for division of profits. The firm closes its accounts on 31st March every year.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A and B started a business on 1⁰ April, 2016 with capitals of Rs. 3,00,000 and Rs. 2,00,000 and interest is to be allowed on capitals @ 6% p.a. Profit sharing ratio between the two respectively. According to the Partnership Deed, B is entitled to salary of Rs.5,000 per month partners is 5:3. During the year, the firm earned a profit of Rs. 2,50,000. Pass Journal entries for division of profits. The firm closes its accounts on 31st March every year.?.
A and B started a business on 1⁰ April, 2016 with capitals of Rs. 3,00,000 and Rs. 2,00,000 and interest is to be allowed on capitals @ 6% p.a. Profit sharing ratio between the two respectively. According to the Partnership Deed, B is entitled to salary of Rs.5,000 per month partners is 5:3. During the year, the firm earned a profit of Rs. 2,50,000. Pass Journal entries for division of profits. The firm closes its accounts on 31st March every year.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A and B started a business on 1⁰ April, 2016 with capitals of Rs. 3,00,000 and Rs. 2,00,000 and interest is to be allowed on capitals @ 6% p.a. Profit sharing ratio between the two respectively. According to the Partnership Deed, B is entitled to salary of Rs.5,000 per month partners is 5:3. During the year, the firm earned a profit of Rs. 2,50,000. Pass Journal entries for division of profits. The firm closes its accounts on 31st March every year.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A and B started a business on 1⁰ April, 2016 with capitals of Rs. 3,00,000 and Rs. 2,00,000 and interest is to be allowed on capitals @ 6% p.a. Profit sharing ratio between the two respectively. According to the Partnership Deed, B is entitled to salary of Rs.5,000 per month partners is 5:3. During the year, the firm earned a profit of Rs. 2,50,000. Pass Journal entries for division of profits. The firm closes its accounts on 31st March every year.?.
Solutions for A and B started a business on 1⁰ April, 2016 with capitals of Rs. 3,00,000 and Rs. 2,00,000 and interest is to be allowed on capitals @ 6% p.a. Profit sharing ratio between the two respectively. According to the Partnership Deed, B is entitled to salary of Rs.5,000 per month partners is 5:3. During the year, the firm earned a profit of Rs. 2,50,000. Pass Journal entries for division of profits. The firm closes its accounts on 31st March every year.? in English & in Hindi are available as part of our courses for Commerce.
Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of A and B started a business on 1⁰ April, 2016 with capitals of Rs. 3,00,000 and Rs. 2,00,000 and interest is to be allowed on capitals @ 6% p.a. Profit sharing ratio between the two respectively. According to the Partnership Deed, B is entitled to salary of Rs.5,000 per month partners is 5:3. During the year, the firm earned a profit of Rs. 2,50,000. Pass Journal entries for division of profits. The firm closes its accounts on 31st March every year.? defined & explained in the simplest way possible. Besides giving the explanation of
A and B started a business on 1⁰ April, 2016 with capitals of Rs. 3,00,000 and Rs. 2,00,000 and interest is to be allowed on capitals @ 6% p.a. Profit sharing ratio between the two respectively. According to the Partnership Deed, B is entitled to salary of Rs.5,000 per month partners is 5:3. During the year, the firm earned a profit of Rs. 2,50,000. Pass Journal entries for division of profits. The firm closes its accounts on 31st March every year.?, a detailed solution for A and B started a business on 1⁰ April, 2016 with capitals of Rs. 3,00,000 and Rs. 2,00,000 and interest is to be allowed on capitals @ 6% p.a. Profit sharing ratio between the two respectively. According to the Partnership Deed, B is entitled to salary of Rs.5,000 per month partners is 5:3. During the year, the firm earned a profit of Rs. 2,50,000. Pass Journal entries for division of profits. The firm closes its accounts on 31st March every year.? has been provided alongside types of A and B started a business on 1⁰ April, 2016 with capitals of Rs. 3,00,000 and Rs. 2,00,000 and interest is to be allowed on capitals @ 6% p.a. Profit sharing ratio between the two respectively. According to the Partnership Deed, B is entitled to salary of Rs.5,000 per month partners is 5:3. During the year, the firm earned a profit of Rs. 2,50,000. Pass Journal entries for division of profits. The firm closes its accounts on 31st March every year.? theory, EduRev gives you an
ample number of questions to practice A and B started a business on 1⁰ April, 2016 with capitals of Rs. 3,00,000 and Rs. 2,00,000 and interest is to be allowed on capitals @ 6% p.a. Profit sharing ratio between the two respectively. According to the Partnership Deed, B is entitled to salary of Rs.5,000 per month partners is 5:3. During the year, the firm earned a profit of Rs. 2,50,000. Pass Journal entries for division of profits. The firm closes its accounts on 31st March every year.? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup