Question

Paid to casual labour
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Answer 1

Explanation:

Shashi, Santosh and Shanta are in partnership and as at 1st April, 2020 their respective capitals were: 40,000,30,000 and 30,000. Santosh is entitled to a salary of 6,000 p.a. and Shanta 4,000 p.a. payable before division of profit. Interest is allowed on capitals @ 5% p.a. and is not charged on drawings.

Of the divisible profits, Shashi is entitled to 50% of the first 10,000, Santosh to 30% and Shanta to

20%, over that amount profits are shared equally. Profit for the year ended 31st March, 2021, after

debiting partners' salaries but before charging interest on capitals was 21,000 and the partners had

drawn 10,000 each on account of salaries, interest and profit.

Prepare Profit and Loss Appropriation Account showing the distribution of profit and Capital Accounts

of the partners.