10. Bat and Ball are partners sharing the profits in the ratio of 2:3 with capitals of 1.20,000 and 60,000respectively. On 1st October 2017. Bat and Ball granted loans of 2.40.000 and 1.20,000 respectively tothe firm. Bat had allowed the firm to use his property for business for a monthly rent of 5.000. The lossfor the year ended 31st March 2018 before rent and interest amounted to 9,000. Show distribution ofprofit loss.(Ans.: Share of Loss: Bat-31,920: Ball-747.880)(Hint: Interest on Partner's Loan and Rent is a charge against profit)
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Answer:
Profit and Loss Appropriation account
(for the year ended 31st March, 2018)
Dr. Cr.
Particulars Amount Particulars Amount
To Loss b/d (before interest) 9000 By loss transferred to:
- Bat's Capital a/c
- Balls' Capital a/c
7920
11880
To interest on Bat's loan =7200
To interest on Balls' loan=3600
19800 19800
Working Note:
1. Interest on Bat's loan for 6 months= 240000 * 6/100 * 6/12 = 7200
2. Interest on Ball's loan for 6 months= 120000 * 6/100 * 6/12= 3600
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