According to Profit and Loss Account, the net profit for the year is 1,40,000. The total
interest on partner's capital is? 8,000 and a partner is to be allowed commission of
*5,000. The total interest on partner's drawings is *1,200. The net profit as per Profit and
Loss Appropriation Account will be:
Answers
Given :
Net Profit = 1,40,000
Interest On Capital = 8,000
Commission = 5,000
Interest On Drawings = 1,200
To Find :
Profit as per Profit and Loss Appropriation Account
Solution :
• The items in Debit Side :
Commission = 5,000
Interest On Capital = 8,000
= Total Debit Side
= 5,000 + 8,000 = 13,000
• The Items in Credit Side :
Net Profit = 1,40,000
Interest On Drawings = 1,200
= Total Credit Side
= 1,40,000 + 1,200 = 1,41,200
Distribution of Profit :
Total Credit Side - Debit Side
= 1,41,200 - 13,000
= 1,28,200
∴ Net Profit as per Profit and Loss Appropriation Account will be 1,28,200
Format Of P/L Appropriation Account is Attached ;
Answer:
1,28,200 Will be the net profit in the Profit and Loss Appropriation Account.
Explanation:
STEP 1 :
Given,
as per the question
- Net Profit = 1,40,000
- Interest On Capital = 8,000
- Commission = 5,000
- Interest On Drawings = 1,200
STEP 2 :
Profit and Loss Appropriation Account
DEBIT SIDE ITEMS:
Commission = 5,000
Interest On Capital = 8,000
= 5,000 + 8,000
= 13,000
CREDIT SIDE ITEMS:
Net Profit = 1,40,000
Interest On Drawings = 1,200
= 1,40,000 + 1,200
= 1,41,200
STEP 3 :
NET PROFIT = TOTAL CREDIT ITEMS - TOTAL DEBIT ITEMS
= 1,41,200 - 13,000
= 1,28,200. /-
Hence, the net profit in the profit and loss appropriation account will be Rs. 1,28,200 /-
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