K and S are partners sharing profits and losses in the ratio of 1:1. k is a non working partner and contributes 60000 as his cap. S is a working partner and agreed to work(overtime) for the firm. The partnership deed provides for interest on cap. @10% p.a . and salary to every working partner @ 3000 p.a. The profit of the firm before charging anything was 6000. Prepare p/l appropriation account. (3m)
Dear Student,
Working Notes:
Interest on K’s Capital = 60,000 @ 10% = 6,000
Salary to S = 3,000 p.a.
Total Appropriation = Rs 9,000 (6,000 + 3,000)
Profits available = 6,000, therefore, interest on capital and salary will be allowed proportionately,
Hope this clarifies your doubt.
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| Profit and Loss Appropriation Account | |||
| Dr. | Cr. | ||
| Particulars | Amount Rs |
Particulars | Amount Rs |
| Salary to S | 2,000 | Profit & Loss A/c | 6,000 |
| Interest on Capital to K | 4,000 | ||
| 6,000 | 6,000 | ||
Working Notes:
Interest on K’s Capital = 60,000 @ 10% = 6,000
Salary to S = 3,000 p.a.
Total Appropriation = Rs 9,000 (6,000 + 3,000)
Profits available = 6,000, therefore, interest on capital and salary will be allowed proportionately,
Hope this clarifies your doubt.
Keep posting!!