*Q.7. A and B are partners in a firm sharing profits or losses in the ratio of 2:3 with capitals of 4,00,000 and 8,00,000 respectively. Each partner is entitled to 10% p.a.
interest on his capital. B is entitled a commission of 10% on net.profit remaining after
deducting interest on capital but before charging any commission. A is entitled a
commission of 8% of net profit remaining after deducting interest on capital and after
charging all commissions. The profit for the year prior to calculation of interest on
capital was 6,00,000.
Prepare Profit and Loss Appropriation Account.
Answers
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A and B are partners sharing profits and losses In the ratio of 3 : 1. On 1st April, 2017; their capitals were: A Rs. 50,000 and B Rs. 30,000. During the year ended 31st March, 2018 they earned a net profit of Rs. 50,000. The terms of partnership are:
(a) Interest on capital is to be allowed @ 6% p.a.
(b) A will get a commission @ 2% on turnover.
(c) B will get a salary of Rs. 500 per month.
(d) B will get commission of 5% on profits after deduction of all expenses including such commission.
Partners' drawings for the year were: A Rs. 8,000 and B Rs. 6,000. Turnover for the year was Rs. 3,00,000.
After considering the above facts, you are required to prepare Profit and Loss Appropriation Account and Partners' Capital Accounts.
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Answer:
interest on B's capital