Question

Arti and Bina are partners with profit sharing ratio of 2:1 and capital of Rs.500000 and

Rs.400000 respectively. They are allowed 8% p.a. interest on capital and are charged 10%

p.a. interest on their drawings. Their drawings during the year were Arti Rs.80000 and Bina

Rs.60000. Arti’s share of net profit as per profit and loss appropriation account amounted to

Rs.100000. Net profit of the firm before any appropriation was

(a) Rs.208000 (b) Rs.215000 (c)Rs.179000 (d) Rs.222000

1​

Answer 1

"(a) Rs.208000"

Explanation:

                                   Profit and Loss Appropriation a/c

                Particulars                  Amount                Particulars                  Amount

To Interest on Capital:                                   By Interest on Drawings:

     Arti : 500000x8/100=                                   Arti: 80000x10/100 =

                    40000                     72000                         8000                  14000

    Bina : 400000x8/100=                                  Bina: 60000x10/100 =

                    32000                                                          6000

To Profit:                                                          By Net Profit b/d               208000

     Arti : 100000                         150000

     Bina: 50000

                                                    220000                                                  220000