Question

A and B are the partners with capitals of ` 5,00,000 and ` 3,00,000 respectively. The profit for the year ended 31st March 2016 was ` 3,46,000 before allowing interest on partner’s loan. Show the distribution of profit after taking the following into consideration:
1] A advanced a loan of ` 1,50,000 to the firm on 1st April, 2015.
2] Interest on capital to be allowed @ 5% p.a.
3] Interest on drawings @ 6% p.a. Drawings were A ` 60,000 and B ` 40,000.
4] B is to be allowed a commission of 2% on sales. Sales for the year were ` 30,00,000.
5] 10% of the divisible profits is to be kept in a Reserve Account. Prepare Profit and Loss Appropriation a/c​

Answer 1

This is the method for the question