Question

On 1st April, 2017, A and B entered into partnership contributing ₹ 60,000 and ₹ 45,000 respectively. They agreed to share profits and losses in the ratio of 3 : 2. B is allowed salary of ₹ 12,000 per year. Interest on capital is to be allowed @ 10% p.a. During the year, A withdrew ₹ 9,000 and B withdrew ₹ 18,000 as drawings, Interest on drawings paid by A and B were ₹ 150 and ₹ 210 respectively. Profit for the year ended 31st March, 2018 before the above adjustments was ₹ 35,000. Show distribution of profits by preparing Profit and Loss Appropriation Account of the firm. Prepare Partners Capital Accounts also.

Answer 1

HEYA MATE YOUR ANSWER IS

B will get commission of 5% on profits after deduction of all expenses including such commission.

Partners drawings for the year were: A ₹ 8,000 and B

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Answer 2

Explanation:

Working Notes:

1. Calculation of Interest en Capital

Interest on A's Capital = $60,000 \times \frac{10}{100}=6,000$

Interest on B's Capital = $45,000 \times \frac{10}{100}=4,500$

2. Calculation of Share of Profit for each Partner

Profit available for Distribution = $\mathrm{Rs} .35,000+\mathrm{Rs} .360-\mathrm{Rs} .12,000-\mathrm{Rs} .10 .500=\mathrm{Rs} .12 .860$

A's Profit Share = $12,860 \times \frac{3}{5}=7,716$

B's Profit Share = $12,860 \times \frac{2}{5}=5,144$