Question

Accountancy
2. A and B are partners in a firm. Their partnership deed provides the following only:
Interest on Capital to be allowed @ 12%.
Interest on drawings is to be charged @ 12% p.a.
They presented the following Profit and Loss Appropriation Account:
Dr.
Profit and Loss Appropriation Account
Particulars
(3) Particulars
To Interest on Capitals @12% p.a.
By Profit and Loss A/c (net profit)
A on 40,000
4,800
B on 20,000
2,400 By Interest on Drawings of B
@12% p.a. on 6,000
To Interest on B's Loan @4% p.a.
400
CE
49,280
720
6,000
To Salary to A (for working as
manager)
To Profit:
A 3/4
27,300
B 1/4
9,100
36,400
50,000
50.000
You are required to rectify the mistakes and prepare revised Profit and Loss Appropriation
Account.
[Ans. Share in Profit: A20,920; B *20,920)​

Answer 1

Answer:

In the absence of partnership deed, specify the rules relating to the following: (i) Sharing of profits and losses. (ii) Interest on partner's capital. ( ...