Question

Akhil and Bimal are partners sharing profits in the ratio of 3 : 2. Akhil gave loan to the firm of Rs 1,00,000 on 1st October, 2019. On the same date, the firm gave loan to Bimal of Rs 1,00,000. They do not have an agreement as to interest. Akhil had also given his personal property for firm’s godown at a monthly rent of Rs 5,000. Firm earns profit of Rs 1,03,000 (before above adjustments) for the year ended 31st March, 2020. Show the distribution of profit for the year

Answer 1

Explanation:

                                                  Profit and Loss Appropriation account

                                                   (for the year ended 31st March, 2018)

Dr.                                                                                                                       Cr.

ParticularsAmount Particulars Amount To Loss b/d (before interest)9000 By loss transferred to:

- Bat's Capital a/c

- Balls' Capital a/c

7920

11880 To interest on Bat's loan7200   To interest on Balls' loan3600    19800 19800 Working Note:

1. Interest on Bat's loan for 6 months= 240000 * 6/100 * 6/12 = 7200

2. Interest on Ball's loan for 6 months= 120000 * 6/100 * 6/12= 3600

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