Question

16. Atul and Mithun are partners sharing profits in the ratio of 3: 2. Balances as on 1st April, 2020 were as follows: Capital Accounts (Fixed): Atul -5,00,000 and Mithun-6,00,000. Loan Accounts: Atul-3,00,000 (Cr.) and Mithun-2,00,000 (Dr.) It was agreed to allow and charge interest @ 8% p.a. Partnership Deed provided to allow interest on capita @ 10% p.a. Interest on Drawings was charged 5,000 each. Profit before giving effect to above was 2,28,000 for the year ended 31st March, 2021. Prepare Profit and Loss Appropriation Account.

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Answer 1

Answer:

Calculation of Profits to be transferred to P&L Appropriation A/c

Net Profits before Interest on loan                                Rs.2,28,000

Less: Interest on loan given to firm                               (Rs.24,000)

         by Atul                                          

3,00,000 * 8/100

Add: Interest received on loan                                        Rs.16,000

taken by Mithun

2,00,000 * 8/100

                                                                              Net Profits after Interest on Loan                                   Rs.2,20,000

Net Profits after Interest on Loan Rs.2,20,000

Calculation of Interest on capital

Atul : 5,00,000 = Rs.50,000

Mithun : 6,00,000 = Rs.60,000

Total = Rs.1,10,000

                                       P&L Appropriation A/c

Particulars          Amount(Rs.)      Particulars          Amount(Rs.)

To Interest             1,10,000        By P&L A/c           2,20,000

on Capital A/c                             By Interest on           10,000

                                                   Drawings A/c  

To Partners

Capital A/c:

(3:2)

Atul                           72000

Mithun                       48000    

Explanation:

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Answer 2

Answer:

                    Profit and Loss appropriation A/C for the year 2021

Particulars                           Amount        Particulars                      Amount  

To Interest on Capital@10%                    By Profit and Loss A/c    2,28,000                                                                      

                 Atul - 50000                          By Interest on Drawings   10,000                                  

            Mithun - 60000       1,10,000       (Atul - 5000, Mithun - 5000)                                                                        

To Interest on loan A/c         24,000       By Interest on loan A/c     16,000    

    (Atul - 8% of 300000)                             (Mithun - 8% of 200000)

To Atul's  Capital A/c            1,26,000                                                                              

( $\frac{3}{5}$ × $2,10,000$ = 1,26,000)          

To Mithun's Capital A/c          84,000

( $\frac{2}{5}$ × $2,10,000$ = 84,000)    

               Total       ----        2,54,000                       Total   ----       2,54,000  

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