Question

Chintoo and Montoo are partners without any agreement on 1st April, 2017 and
they invested Capital 20,000 and 10,000 respectively. On 30th Nov., 2017,
Chintoo advances to the firm 4,000 on loan. The Profit and Loss Account for
the year 2017-18 shows profit of 4,000, but the partners are not agreed upon the
question of interest and division of profit.
Prepare Profit & Loss Appropriation Account.​

Answer 1

Answer:  Profit and loss Appropriation A/c Dr. 4,25,000

        To A's capital A/c                                         2,12,500

        To B's capital A/c                                         2,12,500

(Being profit distributed equally)

                          PARTNERS CAPITAL ACCOUNTS

Particulars  A  B Particulars   A  B

To bal c/d 7,12,500  5,12,500   By bank a/c  5,00,000  3,00,000

      By profit and loss App A/c  2,12,500  2,12,500

Total  7,12,500  5,12,500  Total  7,12,500  5,12,500

                                                A's Loan Account

Particulars  Amount Particulars   Amount

To bal c/d  2,05,000  By bank A/c  2,00,000

    By interest on A's loan         5000

Total  2,05,000  Total  2,05,000

Calculation of Interest on Loan

Interest on A's loan = 2,00,000*6%*5/12=5000

Interest on A's Loan A/c Dr. 5000

  To A's loan A/c                            5000

(Being interest on loan paid)

Profit and loss A/c Dr. 5000

  To Interest on A's loan A/c    5000

(Being interest transferred to p&l A/c)

Explanation: