Virat and Anushka are partners in a firm sharing profit and loss 2:1. . Their capital balance were Rs 10 lakh and 8 lakh respectively. The firm made profit during the year amounting to Rs 345000. Both partners are allowed salary of Rs 2500 per month interest on capital is allowed at the rate of 5% on capital balance. Calculate closing balance of capital for Virat and Anushka
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PROFIT AND LOSS APPROPRIATION ACCOUNT
Particulars Amount Particulars Amount
To Interest on capital
X= 50,000
To Salary
Y= 30,000 80,000 By net profit 80,000
Total 80,000 Total 80,000
Interest on X's capital = 20,00,000*8%=1,60,000
Salary to Y = 8000*12 = 96,000
Total = 2,56,000
Net profits available is less than the appropriations to be made. So,the appropriations are to be made in the ratio of interest and salary i.e 5:3.
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