Question

Sajal and Kajal are partners sharing profits and losses in the ratio of 2 : 1. On 1st April, 2017 their Capitals were: Sajal ₹ 50,000 and Kajal ₹ 40,000.
Prepare Profit and Loss Appropriation Account and the Partners Capital Accounts at the end of the year after considering the following items:
(a) Interest on Capital is to be allowed @ 5% p.a.
(b) Interest on the loan advanced by Kajal for the whole year, the amount of loan being ₹ 30,000.
(c) Interest on partners drawings @ 6% p.a. Drawings: Sajal ₹ 10,000 and Kajal ₹ 8,000.
(d) 10% of the divisible profit is to be transferred to Reserve.
The net profit for the year ended 31st March, 2018 ₹ 68,460.
Note: Net profit means net profit after debit of interest on loan by the partner.

Answer 1

Working Notes:

1. Calculation of Interest on Capital

Interest on Sajal's Capital = $50,000 \times \frac{5}{100}=2,500$

Interest on Kajal's Capita  = $20,000 \times \frac{5}{100}=2,000$

2. Calculation of Interest on Drawings

Interest on Sajal's Drawings $=10,000 \times \frac{6}{100} \times \frac{6}{12}=300$

Interest on Kajal's Drawings = $8,000 \times \frac{6}{100} \times \frac{6}{12}=240$

3. Calculation of Amount to be transferred to Reserve

Amount for Reserve =10 % of Divisible Profit

Divisible Profit = Profit + Interest on Drawings - Interest on Capital

Rs .68,460+Rs.540-Rs .4,500

= Rs .64,500

Amount of Reserve = $64,500 \times \frac{10}{100}$

= 6,450

4. Calculation of Profit Share of each Partner

Profit available for Distribution =68,460 + 540 - 4,500-6,450$

= Rs.58,050

Profit Sharing Ratio = 2 :1

$\begin{aligned}&\text { Sajal's Profit Share }=58,050 \times \frac{2}{3}=38,700\\&\text { Kajal's Profit Share }=58,050 \times \frac{1}{3}=19,350\end{aligned}$

Answer 2

profit ratio is 5:4:11

kabir 40,000

zoravar 32,000

parul 88,000