Net loss of the firm as per profit and loss account for the year ending March 31, 2024 amounted to ₹75,000. Yaduvanshi, Madhulika and Vidushi are partners, sharing profits and losses in the ratio of 2:2:1. Their fixed capitals on April 01, 2019 were; Yaduvanshi ₹5,00,000, Madhulika ₹4,00,000 and Vidushi ₹3,50,000. On the basis of the above information, pass the necessary journal entry.
Answer & explanation
Correct answer: option 2
The correct answer is option 2-
Yaduvanshi current A/c Dr. 30,000
Madhulika current A/c Dr. 30,000
Vidushi current A/c Dr. 15,000
To profit & loss appropriation A/c 75,000
The loss is given as per profit and loss appropriation account which means all adjustments are done before this.
Total loss = ₹75,000 (distributed in 2:2:1)
Yaduvanshi share = 75,000 x 2/5
= ₹30,000
Madhulika share = 75,000 x 2/5
= ₹30,000
Vidushi share = 75,000 x 1/5
= ₹15,000
As, fixed capital method is followed, so journal entry will be passed through current account of partners. As it is the loss of the firm so partners account will be debited. So, the correct journal entry will be-
Yaduvanshi current A/c Dr. 30,000
Madhulika current A/c Dr. 30,000
Vidushi current A/c Dr. 15,000
To profit & loss appropriation A/c 75,000