Q. 4 A, B and C were partners in a firm sharing profits and losses in the ratio of 3: 3:4. On
1st April 2017 the balances in their Capital and Current Accounts were as follows
Capital Accounts
current Account
A: 400000 cr.
20000 dr.
B: 500000 cr.
10000 dr.
C: 600000 cr.
15000 dr.
respectively.
Their Partnership Deed provided for the following:
(1) Interest on Capital @ 9.pa.
(2) Salary to A @ 50,000 per quarter.
On 1st January 2016, C had given a loan of 200000 to the firm at 6% per annum interest
During the year their drawings were A = 40000 , B =75000 and C= 55000 .On 1st January,
2018. A introduced further capital 200000 .The net profit of the firm before allowing interest
on C's loan was 400000.
Prepare Profit and Loss Appropriation Account of the firm for the year ending 31st March,
2018 and the Current Accounts of the partners.
Answers
Answer:Answer is in the pic
Explanation:
Profit Rs.57500
GIVEN: A, B, and C are partners with a profit sharing ratio of 3: 3: 4.
TO FIND: Profit & Loss Appropriation Account
SOLUTION:
According to the question,
- Partners had both capital and current accounts.
- The interest of 9 % was provided on capital.
- A was paid a salary per quarter.
- Some drawings were made by the partners during the year.
- Some more capital was also introduced into the business.
- Net profit for the year ended is also given as Rs.400,000.
- Profit and Loss appropriation account will record all the expenses and payments made by the firm.
- Capital accounts will be credited by the interest they may receive.
Profit And Loss Appropriation Account
Particulars Amount Particulars Amount
To IOC By Profit 400000
A 36500 Less: IOL (3000)
B 45000
C 54000 135500
To Salary (A) 200,000
To Profit
A 17250
B 17250
C 23000 57500 397000 397000
Therefore,
The profit to be transferred to partner's capital account will be 57500 .
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