A & B are partners sharing profits in the ratio of 3:2 with capitals of Rs. 50000/- and Rs. 30000/-
respectively. Interest on capital is agreed @ 6% p.a., B is to be allowed an annual salary of rs. 2500.
A provision of 5% of net profit is to be made in respect of Manager's Commission and rent of Rs.
24000 is to be accounted being payable to A. Profit for the year before manager's commission and
rent to A was Rs. 39000/-
Prepare Profits & loss Appropriation account and the partners Capital Accounts.
Answers
Explanation:
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