Question

A B and C are partners in a firm. Their fixed capitals on 1st April, 2010 were * 20,000, * 30,000
and * 50,000 respectively. They agreed to allow interest on capital @5% per annum and * 5,000
as salary to each partner. On 1st October, 2010 C advanced a sum of 10,000 as loan to the firm
for which rate of interest was not decided. Their drawings during the year amounted to * 6,000
each on which no interest is to be charged. First 7 20,000 of the divisible profits in any year are
to be distributed in proportion to their capitals, next * 10,000 in the ratio of 1:1:2 respectively
and balance to be distributed equally. The profits for the year ended 31st March, 2011 was
*56,300 before making any adjustments for interest and salaries. The balances of their Current
Accounts as on 1st April, 2010 were A* 1,000 (Cr.), B * 500 (Dr.) and C + 1,500 (Cr.)
Prepare Profit & Loss Adjustment Account and Partners' Current Accounts.
(Ans. Net Profit: A* 8,500, B + 10,500,C+17,000; Balance of Current A/cs: A*9,500, B* 10,500,​

Answer 1

Answer:

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