On 1st April, 2020, Pixie, Nixie and Gypsy entered into a partnership with fixed capitals of ₹ 60,000,
₹ 50,000 and ₹ 30,000 respectively.
On 1st October, 2020, Pixie gave a loan of ₹ 12,000 to the firm.
The partnership deed contained the following clauses:
(a) Interest on drawings to be charged @ 4% per annum.
(b) Pixie to be entitled to a rent of ₹ 2,000 per annum for allowing the firm to carry on the business
in his premises.
Nixie withdrew ₹ 1,000 at the end of the month for the first six months.
Net Profit of the firm for the year ending 31st March 2021 (before any interest but after rent on Pixie’s
premises) was ₹ 1,21,000.
Answers
Answer:
Partners Capital A/c
Dr X Y X Y
To drawings 100000 125000 By Balance b/d 200000 150000
To interest on
drawings 10000 12500 By Interest on capital 24000 18000
By Salary 60000 90000
By Commission 17500 Nil
By profits 124350 99,350
To balance c/d 315850 219850
Profit distribution up to 1,75,000 in the ratio of 4:3 i.e capital ratio and above equally distributed.
Profit And Loss Appropriation Account
Notes :
To interest on Capital
X= 2,00,000*12%
= 24,000
Y= 1,50,000*12%
= 18,000 42000 By net profit 4,61,000
X's salary = 5,000*12
= 60,000
Y's salary = 22,500*4
= 90,000 150000 By interest on drawings
X=1,00,000*10%
= 10,000
Y = 1,25,000*10%
= 12,500
X's Commission
(3,50,000*5%) 17,500
To General reserve
(Notes) 50,300
Share of profits
Up to 1,75,000
X = 1,00,000
Y=75,000
Remaining 48,700
X= 24,350
Y=24,350
Total 4,85,500 Total 4,83,500
Notes :
General Reserve transfer = 20% of Profits before charging Interest on Drawings but after making appropriations
Profit for the year Rs. 461000
Less : Interest on capital (42000)
Less : X's commission (17500)
Less : Salary of X & Y (150000)
Profit available for transfer of general reserve 251500
Profit transfer to general reserve = 20% of Rs. 251500 = Rs. 50300.
Explanation:
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