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 - 
 
 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



Please ask the next question in a different thread.

Regards

  • 3
What are you looking for?