Question

5. A and B are partners with a profit sharing ratio of 2 :1 and capitals of
3,00,000 and $2,00,000 respectively. They are allowed 6% p.a. interest on
their capitals and are charged 10% p.a. interest on their drawings. Their
drawings during the year were A $60,000 and B 40,000. B's share of net
profit as per profit and loss appropriation account amounted to 40,000. Net
Profit of the firm before any appropriations was :​

Answer 1

Explanation:

A and B share profits in ratio 3:2

Profit & Loss Appropriation A/c

Particulars (Dr.) Amount Particulars (Cr.) Amount

To interest on capital

A's capital 3,000

B's capital 1,800

To salary a/c (B)

To profit on appropriation

A's capital 4,620

B's capital 3,080

4,800

2,500

7,700 By P&l a/c 12,500

+ B's salary 2,500 15,000

Hence, A's share of proit is Rs4,620 whereas B's share is Rs3,080