Based on ISM MBA Accounting Assignment Solution and others
Answer:
In addition to normal adjusts discuss in Final Accounts of Sold Trader, there may few more adjustment in respects of firm as under.
- Interest on Capital :
Calculate interest on Capital @ rate given,
- Interest on Partners drawings :
Interest may be charged on drawings made by Partner to make distribution of Profit more equitable. Since drawing are made through the year it is calculated as under –
| If amount are withdrawn equally every month. |
| a) Middle of each month = Int. for 6 months |
| b) On 1st Day of month = Int. for 6½ month |
| c) On Last Day of month = Int. for 5½ month |
| Entry : |
Remaining balance in Profit & Loss Appropriation Account indicates distributable Profit / Loss which should be transferred to Partner‟s Capital Account.
In case of Profit
(Being Net Profit transferred to partners in their Profit / Loss sharing ratio.)
