Question

X and Y are partners with capital of 1,00,000 and 80,000 respectively on 1 April 2016 and their profit sharing ratio is 2:1 . Interest on capital is 12%.
Y is allowed an annual salary rs.6,000 The profit for the year ended of 31st March 2017 is 50,000. Manager is entitled to a commission of 10% of the year . Prepare profit and loss appreciate account and capital account​

Answer 1

Profit and loss appropriation a/c

to intrest on capital by profit and loss a/c 45000

X capital a/c 12000

Y capital a/c 9600

to Y capital a/c 6000

to transfer of profit

X capital a/c 11600

Y capital a/c 5800

45000. 45000

Capital a/c

X. Y. X. Y.

To balance c/d. by balance b/d 100000 80000

by intrest. 12000. 9600

by salary. 6000 123600 101400 by pnl app. 11600. 5800

Explanation:

manager commission will be debited to pnl account and not pnl appropriation because it is a cost on sales...