Question

A and B are partners sharing profits in the ratio of 3: 2. Calculate interest on A's capital if profits for the year are 15,000 and interest on capital to all partners is 20,000 each. (a) 20,000 (b) 12,500 (c) (7,500) (loss) (d) 7,500 ​

Answer 1

Explanation:

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

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