Question

P ion Q are partners sharing profits and losses in the ratio 60:40. On 1 April,2014, their capitals were: P- ₹5,00,000 and Q- ₹3,00,000. During the year ended 31 March,2015, they earned a net profit of ₹7,60,000. The terms of partnership are:
i) Interest on capital @8% p.a.
ii) P will get a commission @3% on turnover.
iii) Q will get a salary of ₹5,000 p.m.
iv) Q will get a commission of 5% on profits after deduction of interest, salary and commission (including his own commission).
v) P is entitled to a rent of ₹20,000 per month for the use of his premises by the firm. It is paid to him by cheque at the end of every month.
Partners' drawings for the year were: P- ₹40,000 and Q- ₹30,000. Turnover for the year was ₹20,00,000. Prepare partners' capital accounts and profit and loss appropriate account

Answer 1

Answer:

On 1 April,2014, their capitals were: P- ₹5,00,000 and Q- ₹3,00,000. During the year ended 31 March,2015, they earned a net profit of ₹7,60,000.