- This topic has 2 replies, 2 voices, and was last updated 9 months ago by
.
- Posts
The current account of a partner has been written up as follows:
CURRENT ACCOUNT (credit in nature)
£ £
Interest on capital 3,000 Balance b/d 300
Salary 4,000 Drawings 10,000
Balance c/d 6,500 Profit share 3,200
13,500 13,500The balance brought down is entered correctly and the other entries are all correct in amount.
What is the correct balance carried down?
A A debit balance of £5,500
B A debit balance of £500
C A credit balance of £500
D A credit balance of £5,500the answer is C, but the question ask carried down, how ?
The opening balance is 300 CR (correct).
Salary, interest on capital and profit share are all part of the process of allocating profits to the partner and should all be credited to the current account and debited to the P&L appropriation account. Those entries bring the credit side of the account up to 10,500,
Drawings represent cash taken out so Cr cash 10,000 and Dr Current account 10,000. That will reduce the current account balance to 500 Cr.
So, answer C
- The topic ‘partnership’ is closed to new replies.