A and B contribute 400000 and 300000 respectively as their capitals. They decided to allow interest on capital @ 8% p.a. Their respective share of profits 3:2 and the profit for the year Rs42000 before allowing for interest on capitals.show the distribution of profit . 1)where there is no agreement except for interest on capital 2.where there is a clear agreement that the interest on capital will be allowed even if the firm In loss
Answers
Answer:
1. PROFIT AND LOSS APPROPRIATION ACCOUNT
Particulars Amount Particulars Amount
To interest on capital
A=30,000*4/6=20000
B=30,000*2/6=10,000 30,000 By net profit 30,000
Total 30,000 Total 30,000
When partnership deed is silent regarding interest as a charge or appropriation.
As the total amount of interest is more than the available profit,the interest should be allowed in the ratio of capital i.e 4:2
Interest on capital
A=4,00,000*6%=24,000
B=2,00,000*6%=12000
PROFIT AND LOSS APPROPRIATION ACCOUNT
Particulars Amount Particulars Amount
To Interest on capital
A= 4,00,000*6%=24000
B=2,00,000*6%=12000 36,000 By net profit
By loss transferred A/c
A=2400
B=3600 30,000
Total 36,000 Total 36,000
Explanation:
hope it will help you
Answer:
ioc a-32000
b-24000
salary a- 12000
commission b- 50000
iod a-400
b- 825
so profit will be distributed a-12120 b- 8080..