Question

Bhanu and Partap are partners sharing profits equally. Their fixed capitals as on 1st April, 2020 were
8,00,000 and 10,00,000 respectively. Their drawings during the year were 50,000 and 100.000
respectively. Interest on Capital is a charge and is to be allowed @ 10% p.a. and interest on drawings is to be charged @ 15% p.a. Profit for the year ended 31st March, 2021 before giving effect to the above was
1,20,000.
Prepare Profit and Loss Appropriation Account.​

Answer 1

Explanation:

Profit and Loss Appropriation a/c

(for the year ended 31st March, 2018)

Dr. Cr.

Particulars Amount Particulars Amount

To Interest on Capital

- Bhanu

- Partap

80000

100000 By Profit and Loss a/c 120000

By Interest on drawings-

- Bhanu

- Partap

7500

15000

By Loss transferred to

- Bhanu's Current a/c

- Partap's Current a/c

18750

18750

180000

180000