Question

Prem and Priya are partners with capital of Rs 3 00,000 and Rs 2,00,000 respectively. The profit

and loss account of the firm showed a net profit of Rs 2,13,400 for the year. Prepare profit and loss

appropriation account and partners capital accounts after taking the following into consideration.

(a) Interest on Prem’s loan of Rs 1,00,000 to the firm.

(b) Interest on capital to be allowed @6% per annum.

(c) Interest on drawings @8% per annum and drawings were;Prem Rs 40,000 and Priya Rs

50,000.

(d) Priya is to be allowed a commission on sales @ 4%. Sales for the year was Rs 5,00,000.

(e) 10% of the divisible profits is to be kept in a reserve account​

Answer 1

answer

b is the right option