Question

A and B are partners. A’s Capital is ₹ 1,00,000 and B’s Capital is ₹ 60,000. Interest on capital is payable @ 6% p.a. B is entitled to a salary of ₹ 3,000 per month. Profit for the current year before interest and salary to B is ₹ 80,000. Prepare Profit and Loss Appropriation Account.

Answer 1

Profit and Loss appropriate amount is calculated below:

Explanation:

Amount A has given to the firm= Rs, 1,00,000

Amount B gave to the firm = Rs, 60,000

Interest on capital is to be calculated at rate of 6% per annum

A’s Interest

= 6% of 1,00,000= 6,000

B’s Interest

= 6% of 60,000= 3600  

Total is 9,600 (6,000+3600)

B’s Salary for complete year

$= 3,000 \times 12= 36,000$

Profit given in the question is Rs. 80,000  

Each partner’s profit will be 17,200 $(\frac {34,400}{2}=17,200)$

Thus, the divisible profit will be

$80,000-(9,600+36,000) = 34,400$