6. C and D are partners in a firm with capitals of 5,00,000 and 33,00,000 respectively.
Their profit sharing ratio is 3:2. D is to be allowed on annual salary of 25,000
During 2012-13, the profits for the year amounted to 1,25,000 (before providing for
interest on capital but after charging D's salary). A provision of 5% of the profits is to
be made in respect of manager's commission. Interest on capital is to be provided @ 6%
per annum You are required to prepare Profit & Loss (App) A/c and partner's capital
accounts
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P is bound to pay Rs 20,000 together with profit of Rs 5,000 to the firm because this amount belongs to the firm.
Explanation: As per Principal and Agent relationship, P is principal as well as agent to the firm and to Q and R. As per this rule, any profit earned by an agent (P) by using the firm’s property is attributable to the firm.
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