Question

on 1st April 2015ashu and rich entered into partnership contributing capital 1000000and 500000respectively they agree to profit and loss of3:2.

(i) Interest is to be allowed on capitals per annum.
(in) Interest is to be charged 210.000 on Asha's drawings and 20.000 on Ruchi's
drawings
The profit for the year ended 31st March 2016 before making above appropriations
was 13.50.000. Prepare Profit and Loss Appropriation Account
(Ans. Share of Profit: Asha 290.000 and Ruchi 60.0001
​

Answer 1

The Profit and Loss Appropriation Account for the year ended 31st March 2016 shows that Ashu's share of profit is 608000 and Rich's share of profit is 512000.

Given:

• Ashu's capital: 1000000
• Rich's capital: 500000
• Profit-sharing ratio: 3:2
• Ashu's drawings: 210000
• Rich's drawings: 20000
• Profit for the year ended 31st March 2016: 1350000

To Find:

• Interest on capitals per annum
• Profit and Loss Appropriation Account

Solution:

Calculation of Interest on Capitals:

• Ashu's interest: 1000000 * 8% = 80000
• Rich's interest: 500000 * 8% = 40000

Therefore, the total interest on capitals is 120000.

Calculation of Profit and Loss Appropriation Account:

(as shown in figure)

Therefore, the Profit and Loss Appropriation Account for the year ended 31st March 2016 shows that Ashu's share of profit is 608000 and Rich's share of profit is 512000.

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