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2.A and B are partners who share profits and losses on a 2:1 basis, respectively, after...


2.A and B are partners who share profits and losses on a 2:1 basis, respectively, after a salary allowance of $12,000 is allocated to partner B. Earnings for the period total $39,000. What will be the amount credited to the Capital account of partner A when the books are closed?

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Answer #1

Computation of amount credited to the Capital account of partner A when the books are closed is as follows:

Partner A share in earning/ profit = Earning available for sharing profit * Partner A share basis

= $ 27,000 * ( 2/3 )

= $ 18,000

Thus, Amount of $ 18,000 credited to the Capital account of partner A when the books are closed

Working note:

Earning availabe for sharing profit / loss = Earning for the period - Salary aalowance to Partner B

= $ 39,000 - $ 12,000

= $ 27,000

Profit sharing ratio is 2:1 for Partner A & Partner B respectively. Thus share of Partner A is (2 /3) rd

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