Question

5. (P & L App. A/c/Intt. on Loan) A, B and C are partners in 6: 3:1 ratio. They earned
profit 96,000 before providing for interest on partners loan. A has given a loan of 55,000
to the firm at 10% p.a. on 1-4-2018, B has also given loan 20,000 on 1-1-2019 at 10% p.a. It
was decided to transfer 20% of profits to general reserve before making any appropriations.
C's salaries is fixed at 12,000 p.a. B gets salaries 2,000 p.m. for the first five months
only
Profits 20,000 are shared in 6:3:1 and excess over 20,000 is shared equally.
Prepare Profit and Loss Appropriation Account for the year ended 31-3-19.
[Ans. A* 22,000; B16,000; C 12,000]​

Answer 1

Explanation:

ANSWER

Profit And Loss Account

Particulars Amount Particulars Amount

To Manager;s

commission

(15000*5/100) 750 By profit before B's Salary

(12500+2500) 15000

To Net profit T/f to

P/L Appropriation

Account 14250

Total 15000 Total 15000

Profit And Loss Appropriation Account

Particulars Amount Particulars Amount

To Interest on capital

A = 50000*6% = 3000

B=30000*6% = 1800 4800 By net profit 14250

B's Salary 2500

To profit T/f to

A's Capital A/c = 4170

B's Capital A/c = 2780 6950

Total 14250 Total 14250

Partners capital account

Particulars A B Particulars A B

By bal b/d 50000 30000

By Int on capital 3000 1800

salary 2500

To bal c/d 57170 37080 By P/L Appr A/c 4170 2780

Total 57170 37080 Total 57170 37080