Question

7 White, Black and Red are partners in a firm. On
the first day of every month, White, Black and
Red drew 314,000, 312,000 and 10,000
respectively.
Interest on capitals and interest on drawings are
fixed @ 8% and 10% respectively. Profit for the
year ended 31st March, 2018 was 15,10,000 out
of which * 4,00,000 are to be transferred to
general reserve. Black and Red are entitled to
receive salary of 7 60,000 and 90,000 per
annum respectively and White is entitled to
receive commission @ 10% on net distributable
profits after charging such commission.
On 1st April, 2017, the balances of their capital
accounts were 10,00,000, * 8,00,000 and
7,00,000 respectively. You are required to show
profit and loss appropriation account for the
year ended 31st March, 2018 and capital accounts
of partners in the books of the firm.​

Answer 1

Answer:

PRODUCT METHOD

Dates Amount(A) No.of months up to 31st march.2108(B) Product

C= A*B

1/5/17 2000 11 22,000

1/8/17 5000 8 40,000

30/9/17 2000 6 12,000

31/1/18 6000 2 12,000

31/3/18 2000 0 0

Total 17000 86,000

Interest on Drawings= 86,000*15%*1/12 =1075

Simple Method

Date Amount No.of months up to 31st march,2018 Interest@15%

1/5/17 2000 11 275

(2000*15%*11/12)

1/8/17 5000 8 500

(5000*15%*8/12)

30/9/17 2000 6 150

(2000*15%*6/12)

31/1/18 6000 2 150

(6000*15%*2/12)

31/3/18 2000 0 0

Total 1075