A, B and C are partners in a firm. Following are their summarised capital accounts :

On 1.1.2018, it is agreed that the following would be effective retrospectively from 1.1.2017:

(1) A shall be entitled to a salary of  ₹750 p.m.

(2) Interest shall be allowed on partners’ capital at 5% on the opening balances.

(3) Profits shall be shared in proportion to opening balance in capital accounts.

(4) C’s share of profit exclusive of interest on capital shall not fall below  ₹15,000, the deficit, if any, being contributed by A out of his share.

You are required to show by a single journal entry to give effect to the above arrangement.

Transcribed Image Text:

Date 31.12.2017 Particulars To Drawings A/c To Balance c/d A 12,000 23,000 35,000 C Date B 12,000 33,000 43,000 31.12.2017 12,000 1.1.2017 45,000 55,000 Particulars By Balance b/d By Sh. of Profit A/c A B 20,000 30,000 15,000 15,000 35,000 45,000 C 40,000 15,000 55,000