Meagan and Jenny are in partnership, sharing profits equally. Provision exists in the partnership agreement for charging
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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
- Prepare journal entries to account for interest on capital and on drawings, and any necessary closing entries using:
- method 1 — variable capital balances
method 2 — fixed capital balances.
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Related Book For
Accounting
ISBN: 9780730382737
11th Edition
Authors: John Hoggett, John Medlin, Keryn Chalmers, Claire Beattie
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