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Dear student,
Since appropriations are more than available profit, profit will be credited to the respective capital accounts on the basis of earnings ratio. Transfer to reserve will be avoided as there is no net profit left. 
 
                           Kabir       Zorawar         Parul
Salary         -      24,000     24,000 
Commission -                                        1,00,000
Interest on
Capital -             26,000     16,000           10,000
 
Total -                 50,000     40,000         1,10,000
 
Earnings Ratio will be 50,000 : 40,000 : 1,10,000 = 5: 4 : 11
 
Total profit available for appropriation will be 1,55,500 + Interest on Drawings
 
Interest on Drawings = 60,000 * 5/100 * 6/12 = 1,500 each
 
Total profit available for appropriation will be 1,60,000 which will be distributed in the ratio 5 : 4 : 11
 
Profit credited to Kabir's Capital A/c will be 40,000, profit credited to Zorawar's Capital A/c will be 32,000 and profit credited to Parul's Capital A/c will be 88,000.


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