Illustration 34.
A, B, and C are partners in a firm. According to the Partnership Deed, the partners are entitled
to draw up to 7,000 per month. On the first day of every month A, B and C drew 37,000;
* 6,000 and $5,000 respectively. Interest on capitals and interest on drawings are fixed
@8%p.a. and 10% p.a. respectively. Profit for the year ended 31st March, 2020 was 7,55,000 out
of which 32,00,000 are to be transferred to General Reserve. B and C are to get salary of 30,000
and * 45,000 p.a. respectively and A is to receive commission @ 10% on distributable profits
after charging such commission. On 1st April, 2019, balances of their Capital Accounts were
*5,00,000, * 4,00,000 and * 3,50,000 respectively.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2020 and
Capital Accounts of Partners in the books of the firm.
Answers
Answer:
Solution
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PROFIT AND LOSS APPROPRIATION ACCOUNT
Particulars Rs Particulars Rs
To, General Reserve A/c 200000 By Profit and loss A/c (Net Profit) 755000
To, Interest on Capital A/c
A ( 500000*8%) 40000
B ( 400000*8%) 32000
C ( 350000*8%) 28000
100000 By Interest on Drawing A/cs (WN 1)
A (84000*10%*6.5/12) 4,550
B (72000*10%*6.5/12) 3,900
C (60000*105*6.5/12) 3,250
11,700
To, Partners Salary A/c
B 30000
C 45000
75000
To, A's Commission A/c (WN 3) 35,609
To, Profit transferred to:
A's Capital A/c 1,18,697
B's Capital A/c 1,18,697
C's Capital A/c 1,18,697
3,56,091
7,66,700 7,66,700
PARTNERS CAPITAL ACCOUNT
Particulars A B C Particulars A B C
To, Drawings A/c 84,000 72000 60000 By, Balance b/d 500000 400000 350000
To, Interest on Drawings A/c 4,550 3,900 3,250 By, Interest on capital A/c 40000 32000 28000
To, Balance c/d 6,05,756 4,74,797 4,78,447 By, Partners Salary A/c _ 30000 45,000
By, A's Commission A/c 35,609 _ _
By, Profit and loss Appropriation A/c 118697 118697 118697
Total 6,94,306 5,50,697 5,41,697 Total 6,94,306 5,50,697 5,41,697