Question

L1JULUU.. U 10.000
47. (Profit & Loss Appropriation A/c/Partner's Capital A/c) Ajay and Atul are partners
in a business showing profits and losses in the ratio of 3:2. Their capitals on 1st Jan., 2018
amounted to 50,000 and 30,000 respectively. During the year ended 31st Dec., 2018 their
profit was 42,050 without taking into account interest on capital and drawings and a
salary to Ajay 12,000 p.a. Interest on capital is to be allowed at 8% p.a. and charged on
drawings at an average rate of 5% p.a. The drawings on Ajay and Atul during the year were
5,000 and 2,000 respectively and interest on them worked out to be * 250 and 100
respectively.​

Answer 1

Answer:

ACCOUNTANCY

A and B are partners sharing profits in the ratio of 3 : 2. with capitals of Rs. 50,000 and Rs. 30,000 respectively. Interest on capital is agreed @ 6% p.a. B is to be allowed an annual salary of Rs. 2,500. During the year profit prior to interest on capital but after charging B's salary amounted to Rs. 12,500. A provision of 5% of the profits is to be made in respect of Manager's Commission. Prepare an account showing the allocation of profits and the Partners' Capital Accounts.

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ANSWER

Profit And Loss Account

Particulars Amount Particulars Amount

To Manager;s

commission

(15000*5/100) 750 By profit before B's Salary

(12500+2500) 15000

To Net profit T/f to

P/L Appropriation

Account 14250

Total 15000 Total 15000

Profit And Loss Appropriation Account

Particulars Amount Particulars Amount

To Interest on capital

A = 50000*6% = 3000

B=30000*6% = 1800 4800 By net profit 14250

B's Salary 2500

To profit T/f to

A's Capital A/c = 4170

B's Capital A/c = 2780 6950

Total 14250 Total 14250

Partners capital account

Particulars A B Particulars A B

By bal b/d 50000 30000

By Int on capital 3000 1800

salary 2500

To bal c/d 57170 37080 By P/L Appr A/c 4170 2780

Total 57170 37080 Total 57170 37080

Explanation:

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