· Pappu and Munna are partners in a firm sharing profits in the ratio of 3:2. The partnership Deed provided that Pappu was to be paid salary of Rs. 2,500 per month and Munna was to get a commission of Rs. 10,000 per year. Interest on capital was to be allowed @5% p.a. and interest on drawing was to be charged @ 6% p.a. Interest on Pappu’s drawing was Rs. 1,250 and on Munna’s drawing was Rs. 425. Capitals of the partners were Rs. 2,00,000 and Rs. 1,50,000 respectively, and were fixed. The firm earned a profit of Rs. 90,575 for the year ended 31st March, 2012.
Prepare the Profit and Loss Appropriation Account of the firm.
Profit and Loss Appropriation Account for the year ended March 31st, 2012 |
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Dr. | Cr. |
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Particulars | Amount Rs | Particulars | Amount Rs | ||||
Pappu’s Salary A/c (2,500x12) | 30,000 | Profit and Loss A/c | 90,575 | ||||
Munna’s Commission A/c | 10,000 | Interest on Drawings A/c |
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Interest on Capital A/c |
| Pappu | 1,250 |
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Pappu | 10,000 |
| Munna | 425 | 1,675 | ||
Munna | 7,500 | 17,500 |
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Partner’s Capital A/c (profits) |
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Pappu | 20,850 |
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Munna | 13,900 | 34,750 |
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| 92,250 |
| 92,250 | ||||
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Working Notes:
1. Computation of Interest on Capital
Pappu = 2,00,000 x 5% = 10,000
Munna = 1,50,000 x 5% = 7,500
2. Profits to be distributed in their profit sharing ratio i.e. 3 : 2
Pappu’s share = 34,750 x 3/5 = 20,850
Munna’s share = 34,750 x 2/5 = 13,900