a and b are partners sharing profit and losses in tha ratio 3:2 with capital of 500000 and 250000 respectively on 1st Aprit 2017 . Is partener is entitled to 10% per annum interest on his capital. A is entitled to a commission of 10% no net profit remaining after deducting interest on capitals but before charging any commission. B is entitled to a commission of 8% of net profit remining after deducting interest on capitals and after charging all commission. The profit for tha year ended 31st March 2018 prior to calculation of interest on capital was 375000. prepare profit and loss appropriation account and show working notes clearly . long answer
Answers
Answer:
1581
Explanation:
PROFIT AND LOSS APPROPRIATION ACCOUNT
Particulars Amount Particulars Amount
To Int on capital
A=50000*6%
= 3000
B=30,000*6%
= 1800 4800 By net profit 50000
To Commission
A=300000*2% 6000
To Salary
B=500*12 6000
To Commission
B(notes) 1581
To profits t/f to
A's Capital A/c= 23714
B's Capital A/c=7905 31619
Total 50000 Total 50000
PARTNERS CAPITAL ACCOUNT
Particulars A B Particulars A B
To drawings 8000 6000 By bal b/d 50000 30000
By Int on
capital 3000 1800
By commission 6000 1581
To bal c/d 74714 35286 By P/L app A/c 23714 7905
Total 82714 41286 Total 82714 41286
Notes:- Commission to B= 5% of profits after all expenses including such commission
= 50,000-4800-6000-6000
= 33,200*5/105 = 1581.