Question

Ram and Shyam are partners sharing profits in the ratio of 2:1 with capitals of ₹25,000 and ₹15,000 respectively. Interest on capital is agreed @6% p.a. Shyam is to be allowed an annual salary of ₹1,500. During the year 2015-16, they earned the profits of ₹10,000. A provision of ₹2,000 is to be made in respect of commission to the manager, interest on drawings being Ram ₹1,500 and Shyam ₹1,000. Prepare Profit & Loss Appropriation A/c.

Answer 1

Answer:

actual profit = 10,000-2000 = 8000

interest on ram's capital = 25,000×6/100 = 1500

interest on shyam's capital = 15,000×6/100 = 900

profit = 8,000+1500+1000 = 10,500

distributional profit = 10,500 - (1500+900+1500) = 6600

RAM's share = 6600×2/3 = 4400

SHYAM's share = 6600×1/3 = 2200