Q.No.5 Mr. A and Mr. B start a business on 01st June ,2021, with capital of 2,570,000 and 800,000. According to agreement Mr. A is entitled for a salary of 250,000 whereas another partner is entitled for Rs. 46,000. Partners borrowed some amount of loan from a financial institution of Rs. 300,000 at 12% interest rate. The interest on capital 7.5% p.a is allowed to partner B. During their first fiscal year of partnership, they earned a net profit of Rs. 1,650,000. Required: Profit and Loss appropriation account to allocate the profit with 3:2 to partners A and B respectively. Provide necessary journal entries. Moreover, also prepare a capital account for the partnership.

Q.No.5 Mr. A and Mr. B start a business on 01st June ,2021, with capital of 2,570,000 and 800,000. According to agreement Mr. A is entitled for a salary of 250,000 whereas another partner is entitled for Rs. 46,000. Partners borrowed some amount of loan from a financial institution of Rs. 300,000 at 12% interest rate. The interest on capital 7.5% p.a is allowed to partner B. During their first fiscal year of partnership, they earned a net profit of Rs. 1,650,000. Required: Profit and Loss appropriation account to allocate the profit with 3:2 to partners A and B respectively. Provide necessary journal entries. Moreover, also prepare a capital account for the partnership.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Partners A, B and C started their partnership firm M/s. ABC LLC in Muscat with capitals of OMR80,000; OMR 48,000 and OMR 40,000 respectively on 1.1.2019. They prepared Partnership Deedfor the partnership and it contains the various clauses related to – the firm has to pay the partners@ 5.5 % p.a., for their capital contributed to the business and the partners have to pay @ 2.5% fortheir drawings taken from the business during the financial year. Further the firm has to pay salaryto A @ OMR 600 per month, @ 10% commission to B and C and bonus to A and C @ OMR 500 each.Finally the firm’s Profit and Losses for the partners to be shared at the end the financial year Up toOMR 9,000 in the ratio of 4:3:2 and Above OMR 9,000 equally. The net profit earned by the firmduring the year ended 31st December 2019 amounted to OMR 55,500. The partners were drawnthe money from the firm during the financial year is - A OMR 4,800: B OMR 3,200 and C OMR 2,000.Prepare both Profit and Loss Appropriation…
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Case 1 Mazin, Mansoor and Malik started a partnership firm on January 1, 2019. They contributed RO. 50,000, RO. 40,000 and RO. 30,000 respectively as their capitals and decided to share profits in the ratio of 3:2:1. The partnership deed provided that Mazin is to be paid salary of RO. 12000 p.a. and Mansoor commission of RO. 2,500 every 6 months. It also provided that interest on capital be allowed @ 6% p.a. The drawings for the year were: Mazin RO. 6,000, Mansoor RO. 4,000 and Malik RO. 2,000. Interest on drawings was RO. 270 for Mazin, RO.180 for Mansoor and RO. 90 for Malik. The net amount of profit as per the profit and loss account for the year ended 2019 was RO. 35,660. Question: Prepare the necessary accounting entries, the profit and loss appropriation account and the partners' capital accounts. Based on the above information answer the following ‘3’ questions. (Do not upload any documents in the moodle) 31. Identify which one of the following accounting entry for payment…
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The simple journal entries to record the partners’ contributions include a debit to mortgage payable for ₱40,000. a credit to loan payable for ₱80,000. a ₱60,000 credit to cash. a ₱60,000 debit to C’s capital account.
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Activity 4: On January 2, 2020, Jenny and Kenny formed a partnership. The following assets were contributed by each of the partners: LOUKS UN Kenny P 60,000 10,000 180,000 Jenny 40.000 Cash Inventory Equipment 60,000 The equipment of Kenny is subject to a mortgage of P50,000 which the partnership has assumed. The partnership agreement specifies that each partner receives 10% interest on her beginning capital balance. Jenny receives an annual salary of P15,000; Kenny receives an annual salary of P20,000. The remaining profit or loss is divided using 2:3 ratio with 2 parts assigned to Jenny and 3 parts assigned to Kenny. During 2020, the partnership had an income of P185,000. Assume there were no drawings during 2020. On January 2, 2021, Jenny and Kenny decide to admit a new partner, Lenny, for a 1/6 interest in the firm for P175,000. The bonus method is used to record the admission of the new partner. After admitting the new partner the partnership agreement is amended as follows: Each…
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:1 Mr. Suhail and Mr. Said decided to start a partnership business. They drafted a partnership deed with the help of a consultant and started the business on 01.11.2020 Some of the key extracts of the partnership deed is given as follows: Resolved that. a. Each partner is to bring in OMR 15,000 as capital b. Each partner is to get 5% interest on capital c. Mr. Suhail is entitled to get a salary of OMR 400 per month d. Firm is entitled to charge 6% interest per annum on partner's drawings. Summary of transactions: November: 2020 Capital contribution: Mr. Suhail -OMR 15000; Mr. Said: OMR a. 15000 b. Purchase of goods- OMR 8.000 sales of goods- OMR 18,000 d. Wages- OMR 200 e. Salary to employees- OMR 1,200 f. Other administrative expenses- OMR 800 g. Rent of building- OMR 1,000 h. Electricity charges- OMR 15 i. Water charges- OMR 5 j. Travelling expenses- OMR 50 k. Furniture purchase- OMR 1,500 1. Electrical fittings- OMR 200 m. Drawings of partners-: Mr. Suhail -OMR 200; Mr. Said; OMR…
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