X, Y and Z are in Partnership, sharing profits and losses in the ratio of 3 : 2 : 1, respectively. Z’s share in the profit is guaranteed by X and Y to be a minimum of Rs 8,000. The net profit for the year ended March 31, 2017 was Rs 30,000. Prepare Profit and Loss Appropriation Account, indicating the amount finally due to each partner.
Answers
Given :X, Y and Z are in Partnership, sharing profits and losses in the ratio of 3 : 2 : 1, respectively.
Z’s share in the profit is guaranteed by X and Y to be a minimum of Rs 8,000. The net profit for the year ended March 31, 2017 was Rs 30,000.
Solution :
Profit and Loss Appropriation account is in the attachment below :
Extra information :
Profit and Loss Appropriation account :
Profit and Loss Appropriation account is prepared to show how the net profit among partners has been distributed. It is credited with interest on drawings and debited with interest on capital , salary or commission payable to partners. After these adjustments have been made the Profit and Loss appropriation account shows the amount of net profit on net loss which shall be distributed among the partner in the agreed profit sharing ratio.
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