Anand, Bhaskar and Dinkar are partners in a firm. On 1st April 2011 the balance in their capital accounts stood at Rs. 10,00,000, Rs 8,00,000 and Rs.6,00,000 respectively. They shared profits in the proportion of 5 4 3 respectively. Partners are entitled to interest on capital @ 10+ per annum and salary to Bhaskar @ Rs 4,000 per month and a commission of Rs.16,000 per quarter to Dinkar as per the provisions of the partnership deed. Anand’s share of profit (excluding interest on capital) is guaranteed at not less than Rs.1,90,000 p.a. Bhaskar’s share of profit (including interest on capital but excluding salary) is guaranteed at not less than Rs 2,45,000 p.a. Any deficiency arising on that account shall be met by Dinkar. The profits of the firm for the year ended 31st March 2012 amounted to Rs.8,32,000. Prepare Profit and Loss Appropriation Account’ for the year ended 31st March 2012

Dear Student
 Profit and Loss Appropriation A/c 
 Date   Particulars     Amount   Date   Particulars     Amount 
       (Rs)         (Rs) 
   Salary of Bhaskar             48,000    Net profit           832,000
   Commission of  Dinkar             64,000        
   Interest on Capital             
   Anand         100,000          
   Bhaskar           80,000          
   Dinkar           60,000        240,000        
   Profit Transferred             
   Anand         200,000          
   Bhaskar         165,000          
   Dinkar         115,000        480,000        
             832,000              832,000
Statement of working
Particulars    Amount 
Profit before Appropriation             832,000
Less : Interest on Capital     
Anand 10,00,000 x 10%         (100,000)
Bhaskar 8,00,000 x 10%           (80,000)
Dinkar 6,00,000 x 10%           (60,000)
Less : Salary to Bhaskar 4,000 x 12           (48,000)
Less : Commission to Dinkar  16,000 x 4           (64,000)
Profit left to be transferred to partners           480,000
Appropriation as Per PSR (5:4:3)    
Anand             200,000
Bhaskar             160,000
Dinkar             120,000
Profit (Share of Profit) guaranteed to Anand             190,000
Actual Share of Anand             200,000
Deficiency                         -  
Profit (Share of Profit + Interest on Capital) guaranteed to Bhaskar             245,000
Profit (Share of Profit + Interest on Capital) to Bhaskar as per above calculation 1,60,000 + 80,000           240,000
Deficiency in Bhaskar's share to be borne by Dinkar                  5,000
Therefore Actual Transfer to Capital accounts from Profit and Loss Appropriation Account
Anand's Share             200,000
Bhaskar's Share             160,000
Add : Deficiency borne by Dinkar                  5,000
Net Profit / (Loss) to Bhaskar             165,000
Dinkar's Share             120,000
Less : Deficiency of Bhaskar                (5,000)
Net Profit / (Loss) to Dinkar             115,000


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