Question

On 1st January, 2018, A, B and Center into partnership contributing #2,50,000, < 1,30,000 and 1,20,000
respectively and sharing profits in the ratio of 5:3 : 2. B and C are entitled to a salary of 7 16,000 and
14,500 respectively per year. Interest on capital is allowed at 5% p.a. 5% interest is charged on
drawings. During the year, A withdrew 40,000, B * 25,000 and C15,000; interest on drawings being
A* 2,250, B*1,125 and C*725. Profit in 2018 before the above mentioned adjustments was 71,400.
Show how the profit is distributed and also prepare the Capital Accounts, if they are fluctuating.
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Answer 1

Answer:

, A, B and Center into partnership contributing #2,50,000, < 1,30,000 and 1,20,000

respectively and sharing profits in the ratio of 5:3 : 2. B and C are entitled to a salary of 7 16,000 and

14,500 respectively per year. Interest on capital is allowed at 5% p.a. 5% interest is charged on

drawings. During the year, A withdrew 40,000, B * 25,000 and C15,000; interest on drawings being

A* 2,250, B*1,125 and C*725. Profit in 2018 before the above mentioned adjustments was 71,400.