Lokesh and Azad are partners sharing profits in the ratio
3:2, with capitals of Rs 50,000 and Rs 30,000, respectively.
Interest on capital is agreed to be paid @ 6% p.a. Azad is
allowed a salary of Rs 2,500 p.a.
During 2013, the profits prior to the calculation of interest
on capital but after charging Azad's salary amounted to Rs
12,500. A provision of 5% of profits is to be made in
respect of manager's commission.
Prepare accounts showing the allocation of profits and
partner's capital accounts.
Answers
Answer:
Lokesh and Azad Are Partners Sharing Profits in the Ratio 3:2, with Capitals of Rs 50,000 and Rs 30,000, Respectively. - Accountancy
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Lokesh and Azad are partners sharing profits in the ratio 3:2, with capitals of Rs 50,000 and Rs 30,000, respectively. Interest on capital is agreed to be paid @ 6% p.a. Azad is allowed a salary of Rs 2,500 p.a. During 2016, the profits prior to the calculation of interest on capital but after charging Azad’s salary amounted to Rs 12,500. A provision of 5% of profits is to be made in respect of manager’s commission. Prepare accounts showing the allocation of profits and partner’s capital accounts.
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SolutionShow Solution
Profit and Loss Adjustment Account
Dr. Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Interest on Capital
By Profit and Loss (12,500 + 2,500)
15,000
Lokesh
3,000
4,800
Azad
1,800
Partner’s Salaries
Azad
2500
Provision for
Manager’s Commission
`15,000 × (5/100)`
750
Profit transferred to
Lokesh Capital
4,170
6,950
Azad Capital
2,780
15,000
15,000
Partners’ Capital Account
Dr. Cr.
Particulars
Lokesh
Azad
Particulars
Lokesh
Azad
Balance b/d
50,000
30,000
Interest on Capital
3,000
1,800
Balance c/d
57,170
37,080
Partner’s Salaries
2,500
Profit and Appropriation
4,170
2,780
57,170
37,080
57,170
37,080
Answer:
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