Kabir, Zoravar and Parul are partners sharing profits in the ratio of 5:3:2. Their capitals as on 1st April, 2019were: Kabir - 5,20,000, Zoravar- 3,20,000 and Parul- 2,00,000.The Partnership Deed provided as follows:(1) Kabir and Zoravar each will get salary of 24,000 p.a.(ii) Parul will get commission of 2% of Sales.(iii) Interest on capital is to be allowed @ 5% p.a.(iv) Interest on Drawings is to be charged @ 5% p.a.(v) 10% of Divisible Profit is to be transferred to General Reserve.Sales for the year ended 31st March, 2020 were 50,00,000. Drawings by each of the partners during theyear was 60,000. Net Profit for the year was 1,55,500.Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2020.
Answers
Profit and Loss Appropriation A/c for the year ended 31.3.2020
Explanation:
P&L Appropriation A/c
Particulars Amount(Rs.) Particulars Amount(Rs.)
To Salary to: By Net Profit 1,55,500
Kabir 24,000 By Drawings 1,80,000
Zoravar 24,000 (W.N.3)
By Interest on 9,000
To Sales Comm. 1,00,000 Drawings(W.N 3)
to Parul(W.N 1)
To Interest on 52,000
Capital(W.N 2)
To General 15,550
Reserve(10%)
To Partner A/c-
(5:3:2)
Kabir 64475
Zoravar 38685
Parul 25790
344500 344500
Working Notes:
1)Calculation of Sales Commission to Parul
= Rs.50,00,000 x 2%
= Rs.1,00,000
2) Calculation of Interest on Capital
= (5,20,000 x 5%) + (3,20,000 x 5%) + (2,00,000 x 5%)
= 52,000
3) Calculation of Drawings and Interest on drawings
a) Drawings = 60,000 x 3 = Rs.1,80,000
b) Interest on Drawings = 1,80,000 x 5%
= 9,000
Explanation:
(i) Since the interest on drawings is not stated whether it is per annum (p.a), we will consider it as for 6 months. So, interest on drawings will be 60,000 x 5/100 x 6/12 for the whole year
(ii) As given in the note, since it is a loss and not a profit, we cannot and so will not calculate or take into account the 5th point- 10% of divisible profit....
