Question

12. Nirmal and Pawan are partners sharing profits in the ratio of 3: 2. The firm had given loan to Pawan of
35,00,000 on 1st April, 2019. Interest was to be charged @ 10% p.a. The firm took loan of * 2,00,000 from Nirmal
on 1st October, 2019. Before giving effect to the above, the firm incurred a loss of 10,000 for the year
ended 31st March, 2020.
Determine the amount to be transferred to Profit and Loss Appropriation Account.​

Answer 1

Amount to be transferred to P&L Appropriation A/c should be Rs.3,28,000

Explanation:

Calculation of Net Profit/Loss to be transferred to P&L Appropriation A/c

Net loss before interest on loan                                ( Rs.10,000 )

Add: Interest received on loan taken                          Rs.3,50,000

         by Pawan

     $[ 35,00,000 \times \dfrac{10}{100} ]$

Less: Interest on loan given by Nirmal to firm             (Rs.12,000)

       $[2,00,000 \times \dfrac{6}{100} ]$

                                                                                                                     

Net Profit after adjusting interest                                Rs.3,28,000

                                                                                                                         

Therefore,Amount to be transferred to P&L Appropriation A/c should be Rs.3,28,000.

Note: Since there was no information about the rate of interest to be given on loan provided by Nirmal to firm,therefore,we have assumed it to be 6% p.a.