Question

Ahmad, Bheem and Daniel are partners in a firm. On 1st April 2011 the balance in their capital accounts stood at Rs.800000, Rs.600000 and Rs.400000 respectively. They shared profits in the proportion of 5:3: 2 respectively. Partners are entitled to interest on capital @5% per annum and salary to bheem @ Rs.3000 per month and a commission of Rs.12000 to Daniel as per the provisions of the partnership deed.

Ahmad share of profits excluding interest on capital is guaranteed at not less than Rs.25000 p.a. Bheem share of profit including interest on capital but excluding salary is guaranteed at not less than Rs.55000 p.a. Any Deficiency arising on that account shall be met by Daniel. The profit of the firm for the year ended 31st March 2012 amounted to Rs.216000. Prepare profit and loss appropriation account for the year ended 31st March 2012.​

Answer 1

P&L Appropriation A/c for the year ended 31st March,2012

Explanation:

                                    Profit and Loss Appropriation A/c

                                                    for the year ended 31/3/2012            

Particulars                       Amount(Rs.)    Particulars            Amount(Rs.)

To Interest on Capital A/c-                       By Profit and Loss A/c 216000

Ahmed                                40000

Bheem                                30000

Daniel                                  20000

To Bheem Salary                36000

$[3000\times12]$

To Daniel Comm. A/c          12000

To Profit transferred to

Capital A/c-

Ahmed                                 39000

$[78000\times\dfrac{5}{10}]$

Bheem                                  25000

$[78000\times\dfrac{3}{10} + 1600]$

Daniel                                    14000

$[78000\times\dfrac{2}{10}-1600]$

                                                                                                                       

                                            216000                                         216000

                                                                                                                       

*Working Notes:

Ahmed's share on Actual Profit = Rs.39000

Bheem's share on Actual Profit = $78000\times\dfrac{3}{10}+30000$ = Rs.53400

Bheem's share of Guaranteed Profit = Rs.55000

Deficiency met by Daniel = Rs.55000-53400

                                          = Rs.1600

Answer 2

$\huge\mathtt{\fbox{\red{Answer}}}$

P&L Appropriation A/c for the year ended 31st March,2012

Explanation:

                                    Profit and Loss Appropriation A/c

                                                    for the year ended 31/3/2012            

Particulars                       Amount(Rs.)    Particulars            Amount(Rs.)

To Interest on Capital A/c-                       By Profit and Loss A/c 216000

Ahmed                                40000

Bheem                                30000

Daniel                                  20000

To Bheem Salary                36000

$[3000\times12]$

To Daniel Comm. A/c          12000

To Profit transferred to

Capital A/c-

Ahmed                                 39000

$[78000\times\dfrac{5}{10}]$

Bheem                                  25000

$[78000\times\dfrac{3}{10} + 1600]$

Daniel                                    14000

$[78000\times\dfrac{2}{10}-1600]$

                                                                                                                       

                                            216000                                         216000

*Working Notes:

Ahmed's share on Actual Profit = Rs.39000

Bheem's share on Actual Profit = $78000\times\dfrac{3}{10}+30000$ = Rs.53400

Bheem's share of Guaranteed Profit = Rs.55000

Deficiency met by Daniel = Rs.55000-53400

                                          = Rs.1600