Anita, Bimla and Cherry are three partners. On 1st April, 2017, their Capitals stood as: Anita ₹ 1,00,000, Bimla ₹ 2,00,000 and Cherry ₹ 3,00,000. It was decided that:
(a) they would receive interest on Capital @ 5% p.a.
(b) Anita would get a salary of ₹ 5,000 per month.
(c) Bimla would receive commission @ 5% of net profit after deduction of commission, and
(d) 10% of the net divisible profit would be transferred to the General Reserve.
Before the above items were taken into account, the profit for the year ended 31st March, 2018 was ₹ 5,00,000. Prepare Profit and Loss Appropriation Account and the Capital Accounts of the partners.
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Explanation:
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Profit and Loss Appropriation Account and the Capital Accounts of the partners are calculated below:
Explanation:
1. Calculation of Interest on Capital
Interest on Anita's Capital
Interest on Bimla's Capital
Interest on Cherry's Capital
2. Calculation of Commission to Bimla
Commission to Bimla = 5 % on Net Profits after Commission
Commission to Bimla
3. Calculation of Amount to be transferred to General Reserve
Amount for General Reserve 10% of Divisible Profit
Divisible Profit
4. Calculation of Share of Profit of each Partner
Profit available for Distribution
Profit Share of Anita, Bimla and Cherry each
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