Question

Q 1 Ram and Rahim start business with capital of ` 50,000 and 130,000 on 1 st January, 2016.

Rahim is entitled to a salary of ` 400per month. Interest is allowed on capitals and is charged on

drawings at 6% per annum. Profits are to be distributed equally after the above noted adjustments.

During the year, Ram withdrew 18,000 and Rahim withdrew 110,000. The profit for the year before

allowing for the terms of the Partnership Deed came to 130,000. Assuming the capitals to be

fixed, prepare the Profit and Loss Appropriation Account​

Answer 1

Answer:

hope it helps you

Explanation:

Calculation of Capital balance in the beginning:

Particulars Ram Mohan

Capitals at the end of the year 24000 18000

Less: Profit already credited (8000) (8000)

Add: Drawings already debited 4000 6000

Capital at the beginning of the year 20000 16000

Note: Interest on capital is always calculated on the opening balance of the partner's capital.

Ram's interest on capital= 20000 * 5/100

= 1000

Mohan's interest on capital= 16000 * 5/100

= 800