A B and C were partners in a firm having capital rs 60000 rs 60000 and rs 80 000 respectively their current account balances were A, rs 10000 B, rs 5000 and C rs 2000 (Dr) According to the partnership deed 10%of the profit is to be transfered to General Reserve and the partners were entitled to a salary of 12000 per annum The profit were to be divided as follows a The first rs 20 000 in proportion to their capitals b Next rs 30 000 in the ratio of 5:3:2
c Remaining profit is to be shared equally
Answers
PROFIT AND LOSS APPROPRIATION A/C
(for the year ended 31st March, 2018)
Dr. Cr.
Particulars Amount Particulars Amount
To Salary to C 12000 By Net Profit a/c 172000
To Interest on Capital a/c
- A
- B
- C
5000
5000
10000
To Profit transferred to:
- A's Current a/c
- B's Current a/c
- C's Current a/c
50000
44000
46000
172000 172000
JOURNAL
1. Interest on Capital a/c..... Dr. 20000
To A's Current a/c 5000
To B's Current a/c 5000
To C's Current a/c 10000
(Being interest on capital transferred to the partner's current accounts)
2. Salary a/c.... Dr. 12000
To C's Current a/c 12000
(Being salary provided to C)
3. Profit and Loss Appropriation a/c.... Dr. 140000
To A's Current a/c 50000
To B's Current a/c 44000
To C's Current a/c 46000
(Being profit distributed among the partners)
Working Note:
Distribution of Profit:
Profit available for distribution= 172000-12000-20000
= 140000
A's share= [20000*1/4] + [30000*5/10] + [90000*1/3]
= 5000+15000+30000
= 50000
B's share= [20000*1/4] + [30000*3/10] + [90000*1/3]
= 5000+9000+30000
= 44000
C's share= [20000*2/4] + [30000*2/10] + [90000*1/3]
= 10000+6000+30000
= 46000
Answer:
A, B and C were partners in a firm having capitals of Rs.60,000; Rs.60,000 and Rs.80,000 respectively.
Their Current Account balances were A : Rs. 10,000; B : Rs.5,000 and C : Rs.2,000 (Dr.). According to
the partnership deed 10% of the profit is to be transferred to General Reserve and the partners were
entitled to interest on capital @ 5% p.a. C being the working partner was also entitled to a salary of Rs.
12,000 p.a. The profits were to be divided as follows :
(a) The first Rs.20,000 in proportion to their capitals.
(b) Next Rs.30,000 in the ratio of 5 : 3 : 2.
(c) Remaining profits to be shared equally.
The firm made a profit of Rs. 1,80,000 for the year ended 31st March, 2019 before charging any of
the above items. Prepare the Profit & Loss Appropriation Account and pass necessary journal entry
for apportionment of profit.