Rajasi and Adam, each doing business as sole proprietors, started a partnership on 1st April,
2020. Rajasi brought in Plant and Machinery valued at Rs.2,50,000 whereas Adam brought in
furniture costing Rs.25,000 and Rs.3,50,000 in cash.
Since the business needed more funds, Adam gave a loan of Rs.1,00,000 to the firm on 30th
June, 2020. Their partnership deed provided for:
(a) Interest on capital to be allowed @10% per annum.
(b) Interest on drawings to be charged @6% per annum.
(c) Rajasi to be given a commission of 4% on the corrected net profits before charging
commission.
(d) Adam to be given a salary of Rs.6,000 per annum.
Adam withdrew Rs.2,500 at the end of every month and Rajasi withdrew Rs.15,000 on 1st
August, 2020. The net profit of the firm, for the year 2020-21 after debiting Adam’ s salary of
Rs.6,000 per annum but before considering any interest due to and due from the partners was
Rs.2,00,000.
You are required to prepare for the year 2020-21:
(i) Profit and Loss Appropriation Account.
(ii) Partners’ Capital Accounts.
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