Question

Red and Rose entered into a partnership on the following terms on 1 Jan 15
(a) Red and Rose are to contribute capital of RS 1, 00,000 and 60,000 respectively
(b) Profits and losses are to be shared in the ratio 3:2
(C) Interest on capital at 5% p.a and on drawings @2% p.a
(d) Red is to get a salary of RS 1, 000 per month
(e) Rose is to get commission at 2% on the net profit of the firm before charging any of the above.
On 31st December 2015, their trading profits before about terms was RS.1,20,000. During the year, Red has written Rs.2,000 and rose
RS.1,000 on which interest to be charged for the whole year
Prepare Capital accounts under fixed and fluctuating methods

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Answer 1

Answer:

Profit and Loss Appropriation a/c

( for the year ended)

Dr. Cr. Particulars Amount Particulars Amount

To Interest on capital

- A

- B 6000

3600 By Profit a/c

(before interest and salary) 80000

To Salary to B (3000*12) 36000

To Profit transferred to:

- A's Capital a/c

- B's Capital a/c

17200

17200

80000