Question

A, B and C were partners in a firm having capitals of 60,000; 60,000 and
780,000 respectively. Their Current Account balances were A: 10,000; B: 5,000
and C: 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 12,000 p.a. The
profits were to be divided as follows:
(a) The first 20,000 in proportion to their capitals.
(b) Next 30,000 in the ratio of 5:3:2.
(c) Remaining profits to be shared equally.
The firm made a profit of 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.​

Answer 1

Answer:

(i)The first Rs 20,000 in proportion to their capitals.

(ii)next Rs 30,000 in the ratio of 5:3:2.

(iii)remaining profits to be shared equally.

During the year the firm made a profit of Rs 1,56,000 before charging any of the above items. prepare the profit and loss appropriation on A/C.