X, Y and Z are partners in a firm sharing profits in 2 : 2 : 1 ratio. The fixed capitals of the partners were : X ₹5,00,000; Y ₹ 5,00,000 and Z ₹ 2,50,000 respectively. The Partnership Deed provides that interest on capital is to be allowed @ 10% p.a. Z is to be allowed a salary of ₹ 2,000 per month. The profit of the firm for the year ended 31st March, 2018 after debiting Z’s salary was ₹ 4,00,000. Prepare Profit and Loss Appropriation Account.
Answers
Explanation:
Working Notes:
1. salary to z has not been debited to profit and loss appropriation accounts because profit of Rs. 4,00,000 is given after adjusting the Z ,S salary.
2.calculation of interest on capital
Interest on X's capital = 5,00,000 × 10/100 = ₹50,000
Interest on Y's capital = 5,00,000 × 10/100 = ₹50,000
Interest on Z's capital = 2,50,000 × 10/100 = ₹25,000
3. Calcuation of profit share of each parther Divisible of profit after interest on capital = Rs.4,00,000 -1,25,000 = 2,75,000
profit sharing ratio = 2:2:1
X's profit share = 2,75,000 × 2/5 = ₹1,10,000
Y's profit share = 2,75,000 × 2/5 = ₹1,10,000
Z's profit share = 2,75,000 × 1/5 = ₹55,000
Working Notes:
1. salary to z has not been debited to profit and loss appropriation accounts because profit of Rs. 4,00,000 is given after adjusting the Z ,S salary.
2.calculation of interest on capital
Interest on X's capital = 5,00,000 × 10/100 = ₹50,000
Interest on Y's capital = 5,00,000 × 10/100 = ₹50,000
Interest on Z's capital = 2,50,000 × 10/100 = ₹25,000
3. Calcuation of profit share of each parther Divisible of profit after interest on capital = Rs.4,00,000 -1,25,000 = 2,75,000
profit sharing ratio = 2:2:1
X's profit share = 2,75,000 × 2/5 = ₹1,10,000
Y's profit share = 2,75,000 × 2/5 = ₹1,10,000
Z's profit share = 2,75,000 × 1/5 = ₹55,000