A, B and C are partners and on 1st April, 2015, their Capital Accounts were
5,00,000, 3,00,000 and 1,50,000 respectively.
The Partnership deed includes the following information:
(a) C is entitled to a salary of 12,000 p.a.
(6) Partner's are to be allowed interest on Capitals @ 6% p.a. and are to be
charged interest on drawings @ 12% p.a.
(c) C is entitled to an extra benefit of 5% of profits in excess of 50,000 after
providing for para (a), (b) and (c).
(d) B is entitled to 1/4th of the profits after providing for all the amounts in para
(a), (b) (c) and (d) and the balance profit will be shared by A and C in the ratio
of 7:3.
A has withdrawn 6,800 on 31st May, 2015 and 10,000 on 1st Nov., 2015. B has
withdrawn 2,000 at the end of each month whereas C has withdrawn 15,000 during
the year.
The net profit for the year ended 31st March, 2016 before making above
adjustments was $2,50,000.
Prepare Profit and Loss Appropriation Account and Partner's Capital Accounts for
the
year ended 31st March, 2016.
Answers
Each partner's share is 1,15,100.
Given,
Capital Accounts = 5,00,000, 3,00,000 and 1,50,000
Salary of C = 12,000 p.a.
Interest on Capitals = 6% p.a
Interest on drawings = 12% p.a
Extra benefit = 5% of 50,000
The balance profit of A and C = 7:3.
To find,
To find the Profit and Loss Appropriation Account and Partner's Capital Accounts for the year ended 31st March 2016.
Solution,
Interest in A's Capital account:
Taking 5,00,000 for 3 months = 5,00,000×6/100×3/12=7,500
Taking 4,00,000 for 9 months = 4,00,000×6/100×9/12=18,000
The sum of 7,500 and 18,000 = 25,500
Again,
Interest in drawings account:
The B's Drawings account = Rs 5,000×12=Rs 60,000×8/100×6/12 =2,400
Therefore,
The C's Drawings account = Rs 60,000×8/100×6/12=2,400
∴ Divisible Profit of the account= 3,84,000 - Interest on all Capital account 43,500 + Interest on Drawings account 4,800 = Rs 3,45,300
∴ Each Partner's share according to the capitals = 3,45,300/3 = 1,15,100.
Hence, Each partner's share is 1,15,100.
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