Question

X and Y were partners in a firm sharing profits in the ratio of 2: 1. On 1st April, 2015 their fixed capitals were 620000 and 240000 respectively. On 1st November,2015 they decided that their total fixed capital should be 900000 in their profit sharing ratio. Accordingly, they introduced extra capital or withdrew excess capital. the partnership also provided for the following.
A monthly salary of 4000 to X
Intrest on Capital @ 9% p.a
Interest on drawings @ 12%p.a
The drawings of X and Y during the year were as follows
(X) (Y)
June 1,2015- 20000 28000
Nov 30,2015- 40000 ----
Feb 1,2016- 15000 10000
During the year ended 31.3.2016 the firm earned a net profit of 300000. 20% of this profit was to be transferred to general reserve. You are required to prepare-
a) Profit and loss appropriation acc
b) Capital accounts of partners
c) Current accounts of partners

Answer 1

Explanation:

Profit and Loss Appropriation a/c

(for the year ended 31st March,2018)

Dr. Cr.

Particulars Amount Particulars Amount

To Interest on Capital:

- X

- Y

- Z

50000

50000

25000 By Profit and Loss a/c

(after charging Z's salary) 400000

To Profit transferred to:

- X's Capital a/c

- Y's Capital a/c

- Z's Capital a/c

110000

110000

55000

400000 400000