Question

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.

Answer 1

Explanation:

which grade is this.......

Answer 2

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

$=1,00,000 \times \frac{5}{100}=5,000$

Interest on Bimla's Capital

$=2,00,000 \times \frac{5}{100}=10,000$

Interest on Cherry's Capital

$=3,00,000 \times \frac{5}{100}=15,000$

2. Calculation of Commission to Bimla

Commission to Bimla = 5 % on Net Profits after Commission

Commission to Bimla

$=Net Profit \times \frac{\text { Rate }}{100+\text { Rate }}$ $=5,00,000 \times \frac{5}{105}=23,810$

3. Calculation of Amount to be transferred to General Reserve

Amount for General Reserve 10% of Divisible Profit

$=3,86,190 \times \frac{10}{100}\\\\=38,619$

Divisible Profit

$= Rs. 5,00,000- Rs. 30,000- Rs. 23,810- Rs. 60,000$

$= Rs. 3,86,190$

4. Calculation of Share of Profit of each Partner

Profit available for Distribution

$= Rs. 5,00,000- Rs. 30,000- Rs. 23,810- Rs. 60,000-Rs. 3,86,190$

$= Rs. 3,47,571$

Profit Share of Anita, Bimla and Cherry each

$=3,47,571 \times \frac{1}{3}=Rs. 1,15,857$