Question

Acm Accounting for Partnership: Basic Concepts
75
ccour Illustration 2
Amit, Babu and Charu set up a partnership firm on April 1, 2015. They
contributed Rs. 50,000, Rs. 40,000 and Rs. 30,000, respectively as their
capitals and agreed to share profits and losses in the ratio of 3:2:1. Amit is to
be paid a salary of Rs. 1,000 per month and Babu, a Commission of Rs. 5,000.
It is also provided that interest to be allowed on capital at 6% p.a. The drawings
for the year were Amit Rs. 6,000, Babu Rs. 4,000 and Charu Rs. 2,000. Interest
on drawings of Rs. 270 was charged on Amit's drawings, Rs. 180 on Babu's
drawings and Rs. 90, on Charu's drawings. The net profit as per Profit and
Loss Account for the year ending March 31, 2015 was Rs. 35,660. Prepare the
Profit and Loss Appropriation Account to show the distribution of profit among
Aca
lount the partners.
Solution
Profit and Loss Appropriation Account​

Answer 1

Explanation:

Step 1

Solution

Profit and Loss Appropriation Account

Particulars Amount Particulars Amount

To Amit's salary 12,000 By Net Profit b/d 35,660

To Amit's commission 5,000 By Interest on Drawings

To Interest on Capital Amit 270

Amit 3,000 Babu 180

Babu 2,400 Charu 90 540

Charu 1,800 7,200

To Profit transferred to

Amit 6,000

Babu 4,000

Charu 2,000 12,000

36,200 36,200