· 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 Accountfor the year ended March 31st, 2012 Dr. Cr. Particulars AmountRs Particulars AmountRs 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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