Question

Q. 11 (B). A, B and Care in partnership sharing profits and losses in the ratio of
2:1:1. It is agreed that interest on Capital will be allowed @ 5 per cent per annum
and interest on drawings will be charged @ 4 per cent per annum. No interest will be
allowed or charged on Current Accounts.
The following are the particulars of the Capital, Current and Drawings Accounts
of the partners:
B
₹
₹
1,50.000 80,000
Capital A/cs (1.4.2002)
60,000
Current A/cs (1.4.2002)
20.000 10,000 Dr. (10,000)
Drawings
30,000 20,000 20,000
Interest on Drawings (2002-2003)
1,000
280
700
The draft accounts for the year ending 31.3.2003 showed a net profit of 1,20,000
before taking into account interest on Capital and drawings and subject to following
rectification of errors :
(1) Life insurance premium of A amounting to 1,500 paid by the firm on 31st
March, 2003 has been charged to Miscellaneous Expenditure Account.
(2) Repairs of machinery amounting to 20,000 has been debited to Plant Account
and depreciation thereon charged @ 20 per cent.
(3) An item in the inventory was valued at 45,000 but was subsequently found to
be worth 330,000 only.
You are required to prepare the Profit & Loss Appropriation Account for the year
ended 31st March, 2003 and the Partner's Current Accounts for the
year.​

Answer 1

Answer:

PROFIT AND LOSS APPROPRIATION ACCOUNT

Particulars Amount Particulars Amount

To Interest on capital

A= 50000*5%=2500

B=30000*5%=1500

C=20000*5%=1000 5000 By net profit 45000

To salary to

B= 5000

C=5000 10000

To profit T/f to

P's current A/c 15000

Q's current A/c 9000

R's current A/c 6000 30000

Total 45000 Total 45000

PARTNERS CAPITAL ACCOUNT

Particulars A B C Particulars A B C

To balance c/d 50000 30000 20000 By balance b/d 50000 30000 20000

Total 50000 30000 20000 Total 50000 30000 20000

PARTNERS CURRENT ACCOUNT

Particulars A B C Particulars A B C

To drawings

10000 7500 6000 By bal b/d 4500 1500 1000

By Interest on capital 2500 1500 1000

By bal c/d 12000 9500 7000 By Salaries 5000 5000

P/L Appropriation A/c 15000 9000 6000

Total 22000 17000 13000 22000 17000 13000