Question

19
23. A,B,Cand Dare four partners sharing profits and losses in the ratio of 7:5:5:3. The firm carned a net
profit of 2,00.000 during the year ended on 31st March, 2019. Capital Account balances on 1st April
,
2018 were: A 290,000, B50,000, C30,000 and D 30,000. The partnership deed contains the
following clauses for distribution of profit:
6) 15% of net profit to be allowed to partners as interest on capital
() Salary to partners: A 12,000 and C# 15,000 pa.
G) Special commission payable to B @ 10% on the net profit (after charging interest on capital, salary
and his commission).
You are required to prepare the Profit & Loss Appropriation Account for the year ended 31st March,
2019.​

Answer 1

Interest on Abha's Capital = Rs 3,00,000

10/100= Rs 30,000 <br> Interest on Bharat's Capital = Rs 20,000= Rs 20,000 <br> Total Interest on Capital = Rs 30,000 + Rs 20,000=Rs 50,000 <br> Profit earned during the year Rs 50,000 is equal to Interest on Capital, therefore, no amount of profit is left for distribution as the amount is sufficient only to pay the interest.