Question

8. Hari and Mohan were in partnership sharing profits in proportion of 3: 2. On 1st April 2013 their capitals were 80,000 and * 60,000 respectively. Interest was agreed to be allowed on capitals and charged on Drawings at 5% per annum. Mohan is to be allowed an annual Salary of 4,800 which has not been withdrawn. During the year 2013-14, Hari withdrew ? 1,000 p.m. and Mohan 1,600 per month on the first day of every month in anticipation of profits. The profits for the year, prior to calculation of interest on capital and drawings but after charging Mohan's salary amounted to 42,500. A provision for manager's commission at 5% on net profit (after charging such commission) is to be made. Prepare Profit and Loss Appropriation Account showing the distribution of profit and also prepare the Partners' Current Accounts. (Ans : Hari's Profit* 20,768, Mohan's Profit 13,846 Total Profit 34,614 Balance of Current Account-Hari 12,443 Mohan 1,926)​

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