ACCOUNTANCY A and B are partners sharing profits and losses In the ratio of 3 : 1. On 1st April, 2017; their capitals were: A Rs. 50,000 and B Rs. 30,000. During the year ended 31st March, 2018 they earned a net profit of Rs. 50,000. The terms of partnership are: (a) Interest on capital is to be allowed @ 6% p.a. (b) A will get a commission @ 2% on turnover. (c) B will get a salary of Rs. 500 per month. (d) B will
Answers
PROFIT AND LOSS APPROPRIATION ACCOUNT Particulars Amount Particulars AmountTo Int on capital
A=50000*6%
= 3000
B=30,000*6%
= 1800 4800 By net profit 50000To Commission
A=300000*2% 6000 To Salary
B=500*12 6000 To Commission
B(notes) 1581 To profits t/f to
A's Capital A/c= 23714
B's Capital A/c=7905 31619 Total 50000 Total 50000 PARTNERS CAPITAL ACCOUNT Particulars A B ParticularsA B To drawings 8000 6000 By bal b/d 50000 30000 By Int on
capital3000 1800 By commission 6000 1581 To bal c/d 74714 35286 By P/L app A/c 23714 7905 Total 82714 41286 Total 82714 41286 Notes:- Commission to B= 5% of profits after all expenses including such commission
= 50,000-4800-6000-6000
= 33,200*5/105 = 1581.
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