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.
Answers
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: