Q. 5 (A). On 1st April, 2018 A and B commenced business with Capitals of
16,00,000 and 2,00,000 respectively. On 31st March, 2019 the net profit (before
taking into account the provisions of deed) was 2,40,000. Interest on capitals is to be
allowed at 6% p.a. B was entitled to a salary of 60,000 p.a. The drawings of the
partners A and B were *60,000 and 40,000 respectively. The interest on Drawings for
A being 32,000 and B 31,000. Assuming that A and B are equal partners, prepare the
Profit & Loss Appropriation A/c and Partner's Capital Accounts as at 31st March,
2019.
TA
Dirigible Rofita F12
Answers
Answer:
PROFIT AND LOSS APPROPRIATION ACCOUNT
Particulars Amount Particulars Amount
To interest on capital
A=30,000*4/6=20000
B=30,000*2/6=10,000 30,000 By net profit 30,000
Total 30,000 Total 30,000
When partnership deed is silent regarding interest as a charge or appropriation.
As the total amount of interest is more than the available profit,the interest should be allowed in the ratio of capital i.e 4:2
Interest on capital
A=4,00,000*6%=24,000
B=2,00,000*6%=12000
PROFIT AND LOSS APPROPRIATION ACCOUNT
Particulars Amount Particulars Amount
To Interest on capital
A= 4,00,000*6%=24000
B=2,00,000*6%=12000 36,000 By net profit
By loss transferred A/c
A=2400
B=3600 30,000
Total 36,000 Total 36,000
Explanation:
hope it helps