Question

A and B formed a partnership on 1st April, 2017. They agreed that out of profits: (a) A should receive a salary of ` 500 per month; (b) Interest on capitals should be allowed @ 6% p.a. and (c) Remaining profits be divided equally. A contributed a capital of ` 50,000 on 1st April, 2017 but B brought in his capital of ` 1,00,000 on 1st July, 2017. During the year, the drawings were: A ` 15,000 and B ` 20,000. Profit for the year ended 31st March, 2018 before the above noted salary and interest was ` 50,000. Prepare Profit and Loss Appropriation Account and the Capital Accounts of the Partners. [Ans.: Capital Accounts: A—` 62,250; B—` 1,02,750.]

Answer 1

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