Question

Rathod owns a land of (8a +4b) by (4a + 6b). He gave his (2a +3b) by (a + b) of
land for building a road to city. What value is depicted by him?​

Answer 1

1. 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