on 1st jan 2018 ram and shyam entered into partnership with the capital of 100000 and 50000 respectively and shares profit in 2;1syam get salary of24000 per annum which has not been withdrawn interest 6%allowed on were 500 and600 respectively in the year 2018 ram has withdrawn 20000 and shyam 30000 against profit before above adjustment profit of the year 87 400 prepare profit and loss appropriation a/c for distribution of profit and capital account
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Answer:
Solution
Calculation of interest on capital.
Interest on X capital
20,000×
100
6
=Rs1200
Interest on Y's capital
10,000×
100
6
=Rs600
Total interest (1200+600)=Rs1800
Total profits available = Rs.1500
As total interest on capital is more than total profits, so profits of Rs 1500 to be distributed between X & Y as per their interest on capital ratio.
X:Y
Interest on capital = 1200:600 or 2:1
∴ X share = 1500×
3
2
=Rs1000
Y share = 1500×
3
1
=Rs500
Part (ii)
When interest on capital is charge, complete interest on capital will be charged.
Total interest = Rs. 1800
Total Profit = Rs. 1500
There is loss of Rs. 300. This loss of Rs. 300 will be distributed between X and Y in 2:3 ratio.
X share of loss = 300*2/5 = Rs. 120
Y share of loss = 300*3/5 = Rs. 180.
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