Simran and Puneet are partners in a firm sharing profits and losses equally. On 1
st April, 2011, the
capitals of the partners were, Simran- Rs. 200,000 and Puneet- Rs. 160,000. The Profit and Loss Account
of the firm showed a net profit of Rs. 375,000 (before interest on Puneet’s Loan) for the year ended 31
st
March, 2012.Considering the following information, prepare the Profit and Loss Appropriation Account of(i) Interest on capital to be allowed @ 6% p.a.
(ii) Interest on Puneet’s Loan Account of Rs. 100,000 for the whole year.
(iii) Interest on drawings of partners @ 6% p.a. Drawings being Simran- Rs. 40,000 and
Punnet- Rs. 30,000.
(iv) Transfer 10% of the distributable profits to the Reserve.
Answers
Answer:
ANSWER
PROFIT AND LOSS APPROPRIATION ACCOUNT
Particulars Amount Particulars Amount
To Int on capital
A=50000*6%
= 3000
B=30,000*6%
= 1800 4800 By net profit 50000
To Commission
A=300000*2% 6000
To Salary
B=500*12 6000
To Commission
B(notes) 1581
To profits t/f to
A's Capital A/c= 23714
B's Capital A/c=7905 31619
Total 50000 Total 50000
PARTNERS CAPITAL ACCOUNT
Particulars A B Particulars A B
To drawings 8000 6000 By bal b/d 50000 30000
By Int on
capital 3000 1800
By commission 6000 1581
To bal c/d 74714 35286 By P/L app A/c 23714 7905
Total 82714 41286 Total 82714 41286
Notes:- Commission to B= 5% of profits after all expenses including such commission
= 50,000-4800-6000-6000
= 33,200*5/105 = 1581.
Left side Column
Particulars. ₹
To IOC a/c
simran : 12000
punnet:. 9600. 21600
To General Reserve A/c. 34950
To share of profit transferred to:
Simran. capital A/c 157275
punnet. capital A/cn. 157275. 314550
Total 3,71,100
_______________________________________
Right side Column.
particulars. ₹
(By profit and loss A/c. 369000
__
Net profit )
By Int. on Drawings. A/c
Simran. 1200
Punnet. 900. 2100
Total 371,100