Question

Q. 2. The partnership agreement of A and B provides that :
(ii) A will be allowed a salary of 400 p.m.
(iii) A who manages the sales department will be allowed a commission equal to 10% of the
drawings were 16,000 and 14,000 respectively. The net profit for the year ending March 31,
(vi) The fixed capitals of A and B are 1,20,000 and 80,000 respectively. Their annual
(iv) 6% interest will be allowed on partner's fixed capital.
52,400
(1) Profits will be shared equally.
net profit after allowing A's salary.
(1) 5% interest will be charged on partner's annual drawings.
2020 amounted to 50,000.
Prepare firm's Profit and Loss Appropriation Account.
Solution :
-
ENS
PROFIT AND LOSS APPROPRIATION ACCOUNT
FOR THE YEAR ENDED 31ST MARCH, 2020
DR.
CR.
Particulars
Particulars
₹
4,800 By Profit & Loss A/C
To Salary to A
(Profit for the year)
To Commission to B
50,000
10% on (50,000 - 4,800) =
4,520 By Interest on Drawings
To Interest on Capital:
(5% on annual drawings)
A Current A/C
7,200
A Current Alc
B Current A/C
4,800 12,000 (5% on 16,000)
800
To Profit transferred to:
B Current A/C
A Current Alc
15,090
(5% on 14,000)
700 1,500
B Current Alc
15,090 30,180
51,500
51,500
Note : Since the rate is 5% and not 5% per annum interest will be charged for full year instead
of six months.​

Answer 1

Answer:

Q. 2. The partnership agreement of A and B provides that :

(ii) A will be allowed a salary of 400 p.m.

(iii) A who manages the sales department will be allowed a commission equal to 10% of the

drawings were 16,000 and 14,000 respectively. The net profit for the year ending March 31,

(vi) The fixed capitals of A and B are 1,20,000 and 80,000 respectively. Their annual

(iv) 6% interest will be allowed on partner's fixed capital.

52,400

(1) Profits will be shared equally.

net profit after allowing A's salary.

(1) 5% interest will be charged on partner's annual drawings.

2020 amounted to 50,000.

Prepare firm's Profit and Loss Appropriation Account.

Solution :

-

ENS

PROFIT AND LOSS APPROPRIATION ACCOUNT

FOR THE YEAR ENDED 31ST MARCH, 2020

DR.

CR.

Particulars

Particulars

₹

4,800 By Profit & Loss A/C

To Salary to A

(Profit for the year)

To Commission to B

50,000

10% on (50,000 - 4,800) =

4,520 By Interest on Drawings

To Interest on Capital:

(5% on annual drawings)

A Current A/C

7,200

A Current Alc

B Current A/C

4,800 12,000 (5% on 16,000)

800

To Profit transferred to:

B Current A/C

A Current Alc

15,090

(5% on 14,000)

700 1,500

B Current Alc

15,090 30,180

51,500

51,500

Note : Since the rate is 5% and not 5% per annum interest will be charged for full year instead

of six months.