Mita. Rita and Sandra were partners in a firm, sharing profits and losses in ratio 2 : 2 : I. Mita had personally guaranteed that in any year Sandra's share of profit, after allowing interest on capital to all the partners @ 5% per annum and charging interest on drawings @4% per annum, would not be less than Rs. 10,000/
The capitals of the partners on 1st April, 2015 were :
Mita Rs. 80,000, Rita Rs. 50,000 and Sandra Rs. 30,000.
The net profit for the year ended 31st March, 2016, before allowing or charging any interest amounted to Rs. 40,000.
Mita had withdrawn Rs. 4,000 on 1st April, 2015, while Sandra withdrew Rs. 5,000 during the year.
You are required to prepare the Profit and Loss Appropriation Account for the year2015-16.
Dear Student
Regards
| Profit and Loss Appropriation A/c | |||||||
| Date | Particulars | Amount | Date | Particulars | Amount | ||
| (Rs) | (Rs) | ||||||
| Net profit | 40,000 | ||||||
| Interest on Capital : | |||||||
| Mita | 4,000 | Interest on Drawings | |||||
| Rita | 2,500 | Mita | 160 | ||||
| Sandra | 1,500 | 8,000 | Sandra | 100 | 260 | ||
| Profit Transferred : | |||||||
| Mita | 9,356 | ||||||
| Rita | 12,904 | ||||||
| Sandra | 10,000 | 32,260 | |||||
| 40,260 | 40,260 | ||||||
| Statement of working | ||
| Particulars | Amount | |
| Profit / (Loss) before any Appropriation | 40,000 | |
| Add : Interest on Drawings | ||
| Mita | 4,000 x 4% | 160 |
| Sandra | 5,000 x 4% x 6/12 | 100 |
| Profit after IOD | 40,260 | |
| Less : Interest on Capital | ||
| Mita | 80,000 x 5% | (4,000) |
| Rita | 50,000 x 5% | (2,500) |
| Sandra | 30,000 x 5% | (1,500) |
| Profit after Iinterest on capital | 32,260 | |
| Appropriation of loss as Per PSR (2:2:1) | ||
| Mita | 12,904 | |
| Rita | 12,904 | |
| Sandra | 6,452 | |
| Profit guaranteed to Sandra | 10,000 | |
| Acutual Share of Sandra | 6,452 | |
| Deficiency in Sandra's share to be borne by Mita | (3,548) | |
| Therefore Actual Transfer to Capital accounts from Profit and Loss Appropriation Account as shre in profit | ||
| Mita's share | 12,904 | |
| Less : Deficiency of Sandra | (3,548) | |
| Net Profit / (Loss) to Mita | 9,356 | |
| Rita's Share | 12,904 | |
| Sandra's Share | 6,452 | |
| Add : Deficiency borne by Mita | 3,548 | |
| Net Profit / (Loss) to Sandra | 10,000 | |
Regards