Q. A, B and C were partners in firm having capitals of Rs. 80,000, Rs. 80,000 and 40,000 respectively.
Their current account balances were Rs. 10,000 , B Rs. 5,000 and C Rs, 2,000 (Dr.) According to the
partnership deed the partners were entitled to interest on capital @ 5% p.a. C being the working
partner is also entitled to a salary of Rs. 6,000 p.a. The profits were to be divided as follows :
The first Rs. 20,000 in proportion Of their capitals. Next Rs. 30,000 in the ratio of Remaining
profits to be shared equally.
The firm made a profit of Rs. 1,56,000 before charging any of the above items. Prepare the profit and
Loss Appropriation Account and pass the necessary journal entries for the appropriation of profits.
21. Ram and Laxman are partners in a firm sharing profits and Losses in the ratio of 3:2. The balance in
their capital accounts as on April, 2016. were: Ram Rs. 30,000 and Laxman Rs. 20,000. The partnership deed provides that Ram is to be paid salary @Rs. 500 p.m. and Laxman is to get commission @2% on total sales. Interest on capital and drawings is to be charged @6% p.a. The drawings Of Ram and Laxman for the year were Rs. 3,000 and Rs. 1,000 respectively. The profit earned by the firm before making above adjustments was Rs. 24,880. Total sales of the firm were Rs. 2,00,000
Prepare necessary accounts when capital accounts are fixed.
Dear Student
Q.20
Ans -
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Q.20
Ans -
Profit and Loss Appropriation A/c | |||||||
Date | Particulars | Amount | Date | Particulars | Amount | ||
(Rs) | (Rs) | ||||||
Salary of C | 6,000 | Net profit | 156,000 | ||||
Interest on Capital : | |||||||
A | 4,000 | ||||||
B | 4,000 | ||||||
C | 2,000 | 10,000 | |||||
Profit Transferred : | |||||||
A | 53,000 | ||||||
B | 47,000 | ||||||
C | 40,000 | 140,000 | |||||
156,000 | 156,000 |
Journal | ||||
Date | Particulars | Debit | Credit | |
Profit and Loss A/c | Dr. | 156,000 | ||
To Profit and Loss Appropriation A/c | 156,000 | |||
(Being Profit transferred for Appropriation) | ||||
Profit and Loss Appropriation A/c | Dr. | 10,000 | ||
To Interest on Capital A/c | 10,000 | |||
(Being Interest on Capital Appropriated) | ||||
Interest on Capital A/c | Dr. | 10,000 | ||
To A's Current A/c | 4,000 | |||
To B's Current A/c | 4,000 | |||
To C's Current A/c | 2,000 | |||
(Being Interest on Capital transferred to current accounts of the partners) | ||||
Profit and Loss Appropriation A/c | Dr. | 6,000 | ||
Salary to C's A/c | 6,000 | |||
(Being Salary Appropriated) | ||||
Salary to C's A/c | Dr. | 6,000 | ||
To C's Current A/c | 6,000 | |||
(Being C's salary transferred to his current account) | ||||
Profit and Loss Appropriation A/c | Dr. | 140,000 | ||
To A's Current A/c | 53,000 | |||
To B's Current A/c | 47,000 | |||
To C's Current A/c | 40,000 | |||
(Being profit appropriated and trasferred to the current account of the partners) |
Calculation | ||
Net Profit available for Appropriation | 156,000 | |
Less: Salary of C | (6,000) | |
Profit after salary | 150,000 | |
Less: Interest on Capital | ||
A | 80,000 x 5% | (4,000) |
B | 80,000 x 5% | (4,000) |
C | 40000 x 5% | (2,000) |
Profits to be distributed to partners | 140,000 | |
Share of Profit : | ||
A | 53,000 | |
B | 47,000 | |
C | 40,000 |
Distribution of Profit | |||
Particulars | A | B | C |
First Rs 20,000 in Ratio of Capital (2:2:1) | 8,000 | 8,000 | 4,000 |
Next 30,000 in 5:3:2 | 15,000 | 9,000 | 6,000 |
Remaining profit (1,40,000 - 50,000 = 90,000) to be shared equally | 30,000 | 30,000 | 30,000 |
Total | 53,000 | 47,000 | 40,000 |
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