Question

Triphati and Chauhan are partners in a firm sharing profits and losses in the ratio of 3:2. Their capitals were Rs. 60,000 and Rs. 40,000 as on January 01, 2005. During the year, they earned a profit of Rs. 30,000. According to the partnership deed both the partners are entitled to Rs. 1,000 per month as Salary and 5% interest on their capital. They are also to be charged an interest of 5% on their drawings, irrespective of the period, which is Rs. 12,000 for Tripathi, L 8,000 for Chauhan. Prepare Partner’s Accounts when capitals are fixed.

Answer 1

(a) If interest on Capital and Partners’ salaries and interest on drawings is charged against profit, the solution will beas :

(b) If interest on capital ad partners salaries and interest on drawings is distributed out of profit.