Kaku and Police are in partnership sharing profits and losses in 3:2 ratio. On 1st April,2015 , their capitals were ₹50,000 and ₹20,000 respectively . The net profit for the year ending 31st March, 2016 without charging interest on capital amounted to ₹28,400.Calculate the amount to which each partner is entitled when:
a) the interest on capital is not allowed;
b) the partnership deed provides for interest on capital@12%p.a. out of profits prior to division thereof.
Answers
Answer:
PROFIT AND LOSS APPROPRIATION ACCOUNT
Particulars Amount Particulars Amount
To Int on capital
A=50000*6%
= 3000
B=30,000*6%
= 1800 4800 By net profit 50000
To Commission
A=300000*2% 6000
To Salary
B=500*12 6000
To Commission
B(notes) 1581
To profits t/f to
A's Capital A/c= 23714
B's Capital A/c=7905 31619
Total 50000 Total 50000
PARTNERS CAPITAL ACCOUNT
Particulars A B Particulars A B
To drawings 8000 6000 By bal b/d 50000 30000
By Int on
capital 3000 1800
By commission 6000 1581
To bal c/d 74714 35286 By P/L app A/c 23714 7905
Total 82714 41286 Total 82714 41286
Notes:- Commission to B= 5% of profits after all expenses including such commission
= 50,000-4800-6000-6000
= 33,200*5/105 = 1581.
Explanation:
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