# Ram and mohan are partners sharing profits and losses in the ratio 2:1. at the end of the year on 31st march,2011 they decided to take their manager sohan in to partnership with effect from 1st april,2008. as manager ,he was geeting an annual salary of rs24000 . he had also advanced rs30000 to the firm by way of a loan on which he was geeting interest @15% p.a.during the three year firm profits after adjusting salary to sohan ,interest on loan and interest on capital of the partners were :::- 2009 profit 43900 2010 loss 20000 2011 profit 1,00,000according to the new aggrement, sohan is to be given annual salary of rs16800 and 1/5 th share inthe profits of the firm . sohan's loan shall be treated as his capital from the begining and similar to other partners as his capital carry interest @10% p.aRECORD THE JOURNAL ENTRY TO GIVE EFFECT TO THE ABOVE.

 Journal Entry Date Particulars L.F. Debit Amount Rs Credit Amount Rs Ram’s Capital A/c Dr. 2,600 Mohan’s Capital A/c Dr. 1,300 To Sohan’s Capital A/c 3,900 (Excess amount paid to Sohan borne by Ram and Mohan) Sohan’s Loan A/c Dr. 30,000 To Sohan’s Capital A/c 30,000 (Sohan’s Loan A/c transferred to his Capital A/c)

 Particulars Amount (Rs) Interest on Loan 30,000*5% (15-10) for 3 years 4,500 Salary 7,200 (24,000-16,800) for 3 years 21,600 Total 26,100

 Particulars Amount (Rs) Profit for the year 2009 43,900 Profit for the year 2011 1,00,000 1,43,900 Less: Loss for the year 2010 20,000 1,23,900 Add: Increase in Profit by Sohan, becoming a partner instead of manager 26,100 1,50,000

Sohan’s share of Profit = 1,50,000*1/5
Sohan’s Share of Profit after becoming a partner is Rs 30,000 but as a manager he had received Rs 26,100, therefore, Rs 3,900 (30,000-26,100) should be credited to his Capital A/c by existing partners in the ratio 2:1.

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