La despucinely being a commissie ann 3. Methun And Nilihin and Qual Pario. with Capitals al I. 80.000 and 1.400.00 en 1-4-2012. The Jeruk deed Provided an Interest at 5% pa. Interest en scheine To thun 8540 and Nithin 3000 Commission B 4000 do During the Mihun wird They private use. The Color adopustment of interest on on I drawing and mithurn Commissien was T U VOO 292 Prepare the proli land the ending 31st March 2013 She 8.000 and
Answers
Answer:Given data:
Mithun and Nithin are partners in a firm, sharing profits and losses equally, having capitals Rs 1,80,000 and Rs 1,40,000 respectively.
Interest on capital is to be charged at 5% p.a.
Interest on drawings for Mithun and Nithin are Rs 550 and Rs 360 respectively.
Mithun is entitled to an annual commission of Rs 8,000.
Mithun withdrew Rs 18,000 and Nithin withdrew Rs 12,000 during the year.
The profit for the year was Rs 42,100.
Objective: To prepare a Profit & Loss Appropriation A/c.
Answer:
Calculation of interests on capitals:
Interest on capital = (Capital × Rate) ÷ 100
For Mithun:
Interest on capital = (Rs 1,80,000 × 5) ÷ 100 = Rs 9,000
For Nithin:
Interest on capital = (Rs 1,40,000 × 5) ÷ 100 = Rs 7,000
Interests on capitals are recorded on the debit side of the appropriation account.
Commissions are recorded on the debit side of the appropriation account.
The profit for the year is recorded on the credit side of the appropriation account.
Interests on drawings are recorded on the credit side of the appropriation account.
Calculation of profit/loss:
To determine profit/loss, observe the debit and credit sides of the account. If the balancing figure appears on the debit side, it is profit. Else, loss.
Credit = Rs 42,100 + Rs 910 = Rs 43,010
Debit = Rs 16,000 + Rs 8,000 = Rs 24,000
Balancing figure = Rs 43,010 - Rs 24,000 = Rs 19,010 [Dr.]
Calculation of profit distribution:
Since they are equal partners, they share their profits and losses equally, i.e., in the ratio 1:1.
For Mithun:
Profit share = Rs 19,010 × 1/2 = Rs 9,505
For Nithin:
Profit share = Rs 19,010 × 1/2 = Rs 9,505
The Profit & Loss Appropriation A/c has been attached below.
Explanation: