Question

Arun, Shobha and Yuvraj were partners in a firm. On 1^st April, 2018 their Fixed Capitals stood at ₹ 1,00,000, ₹ 50,000 and ₹ 50,000 respectively.

As per the provisions of partnership deed.

1. Partners were entitled to an annual salary of ₹ 20,000 each.
2. Interest on Capital ₹ 10% p.a. was to be provided.
3. Profits were to be shared in the ratio 3: 1 : 1. Net profit for the year ended 31^st March, 2019 was ₹ 90,000.

Passs Journal Entries for the above in the books of the firm.

Answer 1

Books of Firm Journal Entries
Date	Particulars	L. F.	A (₹)	B (₹)
2019
March 31	Profit and Loss A/c    ...Dr.		90,000	-
	To Profit and Loss Appropriation A/c		-	90,000
	(Being Net profit transferred to P & L Appropriation A/c)
	Salary A/c    ...Dr.		60,000	-
	To Arun’s Current A/c		-	20,000
	To Shobha’s Current A/c		-	20,000
	To Yuvraj’s Current A/c		-	20,000
	(Being salary allowed to partners)
2019
March 31	Interest on Capital A/c    ...Dr.		20,000	-
	To Arun’s Current A/c		-	10,000
	To Shobha’s Current A/c		-	5,000
	To Yuvraj’s Current A/c		-	5,000
	(Being interest on capital allowed to partners)
2019
March 31	Profit & Loss Appropriation A/c    ...Dr.		80,000	-
	To Salary A/c		-	60,000
	To Interest on Capital A/c		-	20,000
	(Being Partner’s Salary and Interest on Capital transferred to Profit & Appropriation A/c)
	Profit & Loss Appropriation A/c    ...Dr.		10,000	-
	To Arun’s Current A/c		-	6,000
	To Shobha’s Current A/c		-	2,000
	To Yuvraj’s Current A/c		-	2,000
	(Being divisible profit distributed among partners)