Question

Lata and mamta are partners with capitals of rs 300000 and rs 200000 respectively sharing profits as lata 70% and mamta 30% during the year ended 31 march 2005 they earned a profit of rs 226440 before allowing interest on partner's loan. the terms of partnership are as follows
interest on capital is to be allowed at 7% p.a latha to get a salary of rs 2500 per month
interest on mahatma loan account of rs. 80,000 for the whole year.
interest on drawings of partners at 8% p.a. drawings being latha rs 36,000 and mamtha rs 48,000
prepare profit and loss appropriation account

Answer 1

Explanation:

this is the right one, the other ans in the comment box have not provided for general reserve 1/10 of the divisible profit

Answer 2

Answer:

Profit and loss appropriation account has prepared below

Explanation:

Interest on capital:

Interest on capital is to be allowed at 7% p.a

Lata capital amount = Rs 300000

Lata = 300000 × $\frac{7}{100}$

       = 21000

Mamta capital amount = Rs. 200000

Mamta = 200000 × $\frac{7}{100}$

          = 14000

Interest on Mamta’s Loan is provided @ 6% as there is no rate of interest on Partner’s Loan

Interest on loan = 80000 × $\frac{6}{100}$

                         = 4800

Interest on mamta loan = Rs.4800

Distributive profit:

Distributive profit is calculated as ,

Distributive profit = Net profit   - interest on capital - Salary

⇒ 225000 - 35000 - 30000 = 160000

Distributive profit = 160000

10% of the distributable profit should be transferred to general reserve.

⇒ 160000 × $\frac{1}{100}$  = 16000

General reserve = 16000

interest on drawings of partner's at 8% per annum

Lata = 36000 × $\frac{8}{100}$ × $\frac{6}{12}$

       = 1440

Mamta = 48000 × $\frac{8}{100}$ × $\frac{6}{12}$

        = 1920

Lata interest on drawing = Rs. 1440

Mamta interest on drawing = Rs. 1920

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