Question

11. On 1st January 2016 Mr. Author and Mr. Book entered into a
partnership on the following terms.
(a) Mr. Author and Mr. Book are to contribute capitals of
50,000 & 30,000 respectively.
(b) Profit and loss are to be shared in the ratio of 3: 2.
(c) Interest on Capital is to be allowed at 5% p.a.
(d) Interest on drawings is to be charged at 2% p.a.
(e) Mr. Author is to get a salary of * 500 per
month.
(f) Mr. Book is to get Commission at 2% on the Net profits of
the firm before charging any of the above.
On 31.12.16 their trading profit, before giving effect to the
above terms, was 60,000. During the year Mr. Author has
with drawn 1,000 and Mr. Book 500 from the firm on which
interest is to be charged for the year.
You are required to prepare profit & loss appropriation a/c for
the year ended 2016
.
5​

Answer 1

Answer:

(a) Mr. Author and Mr. Book are to contribute capitals of

50,000 & 30,000 respectively.

(b) Profit and loss are to be shared in the ratio of 3: 2.

(c) Interest on Capital is to be allowed at 5% p.a.

(d) Interest on drawings is to be charged at 2% p.a.

(e) Mr. Author is to get a salary of * 500 per

month.

(f) Mr. Book is to get Commission at 2% on the Net profits of

the firm before charging any of the above.

On 31.12.16 their trading profit, before giving effect to the

above terms, was 60,000. During the year Mr. Author has

with drawn 1,000 and Mr. Book 500 from the firm on which

interest is to be charged for the year.

You are required to prepare profit & loss appropriation a/c for