· 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

 

Dr.

Cr.

 

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

 

Interest on Capital A/c

 

Pappu

1,250

 

Pappu

10,000

 

Munna

425

1,675

Munna

7,500

17,500

 

 

Partner’s Capital A/c  (profits)

 

 

 

Pappu

20,850

 

 

 

Munna

13,900

34,750

 

 

 

92,250

 

92,250

 

 

 

 

        

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

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