63. Profit earned by a partnership firm for the year ended 31st March,

1.	63. Profit earned by a partnership firm for the year ended 31st March, 2020 were distributed equally between thepartners-Pankaj and Anu-without charging interest on Drawings. Interest due on Drawings was Pankaj-Compute the3,000 and Anu- 1,000.Pass necessary adjustment entry.
Answer» Answer: have your answer Explanation: As the profits were DISTRIBUTED between Pankaj and ANU without allowing interest on CAPITAL, we have to FIRST reverse the profits that were distributed by passing the entry:- Pankaj's Capital A/c Dr. Anu's Capital A/c Dr. To Profit and loss appropriation A/c. (Being profit distributed earlier reversed) Now we will pass the entry for allowing interest on capital to partners. Profit and loss appropriation A/c Dr. 4,000 To Pankaj's Capital A/c 3,000 To Anu's Capital A/c 1,000 (Being interest on capital being credited to partner's capital a/c)

63. Profit earned by a partnership firm for the year ended 31st March, 2020 were distributed equally between thepartners-Pankaj and Anu-without charging interest on Drawings. Interest due on Drawings was Pankaj-Compute the3,000 and Anu- 1,000.Pass necessary adjustment entry.

Answer»

Answer:

have your answer

Explanation:

As the profits were DISTRIBUTED between Pankaj and ANU without allowing interest on CAPITAL, we have to FIRST reverse the profits that were distributed by passing the entry:-

Pankaj's Capital A/c Dr.

Anu's Capital A/c Dr.

To Profit and loss appropriation A/c.

(Being profit distributed earlier reversed)

Now we will pass the entry for allowing interest on capital to partners.

Profit and loss appropriation A/c Dr. 4,000

To Pankaj's Capital A/c 3,000

To Anu's Capital A/c 1,000

(Being interest on capital being credited to partner's capital a/c)

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