Question

on 1st april,2013 jay and vijay entered into a partnership firm for supplying pens .they contributed capital of rs.80,000 and rs.50,000 respectively. their profit sharing ratio us 3:2.the interest on capital is to be provided at 9% per annum.during the year firm earned profit of rs.7,800.prepare profit and loss appropriation account

Answer 1

Jay. vijay.
Bal c/d 80000 , 5000 =130000
IOC = 7200 , 4600 = 11800
net profit. = 4680 , 3120 = 7200
profit distb. = 66600, 44400

Answer 2

Answer:

Profit and Loss Appropriation a/c

                                         (for the year ended 31st March,2014)

Dr.                                                                                                                      Cr.

Particulars Amount  Particulars  Amount  

To Interest on Capital

- Jay 4800 By Profit and Loss a/c 7800

- Vijay  3000   7800                                                                             7800        

Working Note:

1. Calculation of interest on capital:

Jay's interest on Capital= 9/100 * 80000 = 7200

Vijay's Interest on capital= 9/100 * 50000 = 4500

Total interest= 7200+4500= 11700

2. Proportionate interest on Capital:

Jay's share= [7200/11700]*7800

                 = 4800

Vijay's share= [4500/11700]*7800

                    = 3000

Note: interest on capital can only be provided to the extent of the profits.