A and B are partners According to Profit and loss Account, the Net Profit for the Year is Rs. 2,00,000. The total interest on partners Drawings is Rs. 1000. A’s salary is Rs. 40,000.per year and B’s salary is Rs. 3000 p.m. The net profit as per the Profit and loss Appropriation Account will be:
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Given: The Net Profit for the Year = Rs. 2,00,000
The total interest on partners Drawings = Rs. 1000
The salary of A per year = Rs. 40,000
The salary of B per month = Rs. 3000
To find The net profit as per the Profit and loss Appropriation Account
Solution: From above, we have
The Net Profit for the Year = Rs. 2,00,000
The total interest on partners Drawings = Rs. 1000
The salary of A per year = Rs. 40,000
The salary of B per month = Rs. 3000
Now the salary of B per year =Rs. (3000×12) [∵1 year= 12 months]
= Rs. 36000
For finding the net profit as per the Profit and loss Appropriation Account, we have to first find the credit value and debit value, then subtract the debit value from credit value.
∴ For credit value, we have to add the Net Profit for the Year and the total interest on partners Drawings= Rs. ( 2,00,000+1000) = Rs. 2,01,000
For debit value, we have to add the salary of A per year and the salary of B per year = Rs. (40,000+36,000) = Rs. 76,000
∴ Net profit
=Credit value-Debit value
= Rs.( 2,01,000 - 76,000)
= Rs. 1,25,000
Hence the net profit as per the Profit and loss Appropriation Account will be Rs. 1,25,000.