# Kabir, Zoravar and Parul are partners sharing profits in the ratio of 5:3:2. Their capitals as on 1st April, 2019 were:Kabir-*5,20,000, Zoravar- 3,20,000 and Parul? 2,00,000. The Partnership Deed provided as follows: (i) Kabir and Zoravar each will get salary of 24,000 p.a. (ii) Parul will get commission of 2% of Sales. (ii) Interest on capital is to be allowed @ 5% p.a. (iv) Interest on Drawings is to be charged @ 5% p.a. (V) 10% of Divisible Profit is to be transferred to General Reserve. sales for the year ended 31st March, 2020 were * 50,00,000. Drawings by each of the partners during the year was 360,000. Net Profit for the year was 1,55,500. repare Profit and Loss Appropriation Account for the year ended 31st March, 2020.

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Why reserve is not included
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To calculate interest on capital 520000*5/100 = 26000

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YOURE TOTALLING IS INCORRECT
ITS 2,00,000. NOT 2,00,500

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Okhhh
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Profit will not transfer to general reserve becuase profit is less thn appropriation
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Fhhg

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This is the correct answer ????

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As per 2020 book edition question

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This is the correct answer with reasonable points too 2020 edition

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And reserves are not provided Because they are transferred after all appropriations. But the given profit is not even able to complete appropriations so no reserves can be given
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Since appropriations are more than available profit, probit will be credited to the respective capital accounts on the basis of earnings ratio. Transfer to reserve will be avoided as there is no net profit left.

Kabir        Zorawar      Parul
Salary                                24,000     24,000            -
Commission                            -               -             1,00,000
Interest on Capital             26,000    16,000          10,000

Total                                   50,000    40,000          1,10,000

Earnings Ratio will be 50,000 : 40,000 : 1,10,000 =  5 : 4 : 11

Total profit available for appropriation will be 1,55,500 + Interest on Drawings

Interest on Drawings = 60,000 * 5/100 * 6/12 = 1,500 each

Total profit available for appropriation will be 1,60,000 which will be distributed in the ratio 5 : 4 : 11

Profit credited to Kabir's Capital A/c will be 40,000, profit credited to Zorawar's Capital A/c will be 32,000 and profit credited to Parul's Capital A/c will be 88,000

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2909
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