James and Thomas are partners in a firm sharing profits and losses in the ratio of 3.2 On 31' March, 2021, firm's net profit is Rs.5,60,000. The partnership deed proded interest on capital to James and Thomas Rs.60,000 & Rs.40,000 respectively and interest on drugs for the year amounted to Rs.24,000 from James and Rs. 15,000 from Thomas. James is entitled to salary of Rs. 60,000 p.a. while Thomas is entitled to commission @10% of net divis ble pront Calculate profit to be transferred to Partner's Capital Accounts.
a) Rs. 4,00,000 c) Rs. 4,40,000
b) Rs. 4,28,000. d) Rs. 3,60.000
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Explanation:
PROFIT AND LOSS APPROPRIATION ACCOUNT
Particulars Amount Particulars Amount
To Interest on capital
X= 50,000
To Salary
Y= 30,000 80,000 By net profit 80,000
Total 80,000 Total 80,000
Interest on X's capital = 20,00,000*8%=1,60,000
Salary to Y = 8000*12 = 96,000
Total = 2,56,000
Net profits available is less than the appropriations to be made. So,the appropriations are to be made in the ratio of interest and salary i.e 5:3.
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