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CBSE Class 12-commerce Answered

A,B and C are running partnership firm in A's premises for which it is agreed among them that Rs.60,000 will be paid to A as rent annually in cash. Pass the journal entry for the treatment of rent in the books.
Asked by vimalawsth | 17 Feb, 2019, 03:11: PM
answered-by-expert Expert Answer
Rent paid to partner for using his premises is an expense for the firm, therefore, the amount of rent is debited to Profit & Loss Account as an expense or charge against profits. The amount is paid to Partner so Partners Capital Account is to be credited. Since, the amount of rent is paid in cash, the amount of rent paid in cash will be reduced from the cash balance by crediting the same to cash account.

Following 2 entries are required to be passed:
1. Rent Account          ...Dr.
       To Partners Capital Account
2. Partners Capital Account    ...Dr. 
         To Cash A/c
Answered by Surabhi Gawade | 17 Feb, 2019, 08:24: PM

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