Meagan and Jenny are in partnership, sharing profits equally. Provision exists in the partner­ship agreement for charging interest on capital at the rate of 8% p.a. and interest on drawings at 10% p.a. Capital and Drawings account balances are as follows.

Profit before allowing for interest was $150 000. All drawings were made in expectation of profits.

Required

1. Prepare journal entries to account for interest on capital and on drawings, and any necessary closing entries using:
2. method 1 — variable capital balances

method 2 — fixed capital balances.

Transcribed Image Text:

Meagan, Capital Jenny, Capital Meagan, Drawings Jenny, Drawings $ 96000 108 000 25 000 32 000