Distribution of profit

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vishnu priya (Querist)
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04 March 2013 In case partners of the firm are taking the profit earned in the middle of the year, what will be the entry?

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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04 March 2013 Just make it as drawings i.e debit to partners account and credit to cash/bank or any other (if such drawing is in kind) at the end of the year then transfer the profit to all its partners according to their sharing ratio by debiting profit & loss account and crediting partners account. This adjustment you can make at the middle of the year(i.e at the time of drawings made) but when you make this entry actual profit or loss decrease or becomes Zero so at the end of the year profit & loss account shows only the profit or loss for the remaining period after the middle distribution so it not seems actual profit for the year and may not be proper. So my suggestion is make it as drawings.

OM SAI SRI SAI JAI JAI SAI

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