A, B and C shared the profit of Rs. 9,00,000 in the ratio of 2:2:1 without providing for interest on Bâ??s loan, B granted a loan of Rs. 4,00,000 in the beginning of accounting year. Whereas the partnership deed is silent on the interest on loan and the profit sharing ratio. Give adjusting entry.

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Interest on Loan is charge against profit and hence is debited to P&L account and credited to Partner's loan a/c. Being a charge against profits, it should be transferred to debit of P&L a/c and not to the debit of P&L appropriation a/c. In the absence of deed the profit will be shared equally...
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Interest on Loan is charge against profit and hence is debited to P&L account and credited to Partner's loan a/c. Being a charge against profits, it should be transferred to debit of P&L a/c and not to the debit of P&L appropriation a/c. In the absence of deed the profit will be shared equally and interest on loan will be given at 6%p.a Amount to be Debited A B C 360000 360000 180000 Amount to be Credited A B C 292000 292000 292000 Adjusting entry 68000Dr 68000Dr 112000Cr A's Capital 68000 B's Capital 68000 To C's Capital 112000 To B's Loan 24000. read less
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