A, B and C were partners in a firm sharing profits and losses equally. Their respective capitals were 10,00,000, 9,00,000 and 8,00,000.

 

The partnership deed provided for the following:

(1) Interest on capital @ 9% per annum.

(2) Interest on drawings @ 12% per annum.

(3) Interest on partner’s loan to the firm @ 10% per annum.

 

During the year, B had withdrawn 20,000 for his personal use. On 30.9.2021, A had given a loan of 70,000 to the firm.

 

Pass the necessary journal entries in the books of the firm for the following for the year ended 31st March, 2022:

(i) Allowing interest on C’s capital

(ii) Providing interest on A’s Loan

(iii) Charging interest on B’s Drawings

Also give transfer entries in the Profit and Loss Account/Profit and Loss Appropriation Account, as the case may be.

Marks-3, CBSE:2022-23/Zone-4/Set-1/Q-20

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