Sajal and Kajal are partners sharing profits and losses in the ratio of 2:1. On 1st April, 2015 their Capitals were: Sajal – Rs. 50,000 and Kajal – Rs. 40,000.
Prepare Profit and Loss Appropriation Account and the Partners' Capital Accounts at the end of the year after considering the following items:
(a) Interest on Capital is to be allowed @ 5% p.a.
(b) Interest on loan advanced by Kajal for the whole year, the amount of loan being Rs. 30,000.
(c) Interest on partners' drawing @6% p.a. Drawings: Sajal Rs. 10,000 and Kajal​ Rs. 8,000.
(d) 10% of divisible profits is to be transferred to Reserve.
(e) They earned profit of Rs. 70,620 for the year ended 31st March, 2016.
Dear Student,
Regards
| Profit and Loss Appropriation Account for the year ended |
||||||
| Dr. | Cr. | |||||
| Particulars | Amount Rs |
Particulars | Amount Rs |
|||
| Interest on Capital A/c: | Profit and Loss A/c (70,260 – 1,800) |
68,460 | ||||
| Sajal | 2,500 | Interest on Drawings A/c: | ||||
| Kajal | 2,000 | 4,500 | Sajal | 300 | ||
| Kajal | 240 | 540 | ||||
| Reserve Fund(64,500 10%) | 6,450 | |||||
| Profit transferred to: | ||||||
| Sajal’s Capital A/c | 38,700 | |||||
| Kajal’s Capital A/c | 19,350 | 58,050 | ||||
| 69,000 | 69,000 | |||||
| Partners Capital A/c’ | |||||
| Particulars | Sajal | Kajal | Particulars | Sajal | Kajal |
| Drawings | 10,000 | 8,000 | Balance b/d | 50,000 | 40,000 |
| Interest on drawings | 300 | 240 | Interest on capital | 2,500 | 2,000 |
| Balance c/d | 80,900 | 53,110 | P&l Appropriation A/c | 38,700 | 19,350 |
| 91,200 | 61,350 | 91,200 | 61,350 | ||
Regards