Suresh and Ramesh were partners in a firm sharing profits in the ratio 5:3 Their fixed capitals on 1 - Accountancy - Adjustments in Preparation of Financial Statements

Question

Suresh and Ramesh were partners in a firm sharing profits in the
ratio 5:3 Their fixed capitals on 1 4 2010 were Suresh ?80,000and
Ramesh ?1,00,000 They agreed to allowed interest on Capital @12%
per annum and to charge on drawings @15% per annum The Firm earned
a profit, before all Above adjustment of ?14,040 for the year ended
31 3 2011 The drawings of Suresh and Ramesh during the year were
?6,000 and ?10,000 respectively Showing your calculation clearly,
prepare Profit and Loss Appropriation Account of Suresh and Ramesh
The interest on Capital will be allowed even if firm incurs a loss
?

Ishi · Accepted Answer

Solution:
P & L Appropriation A/c

Particulars
Amount
Particulars
Amount

To interest on capital A/c

By Net Profit
14040

Suresh - 9600

By interest on drawing

Ramesh - 12000
21600
Suresh -6000 x15% x 6/12 =450

Ramesh -10000 x 15% x 6/12 = 750
1200

By Loss t/f to

Suresh - 3975

Ramesh - 2385
6360

21600

Particulars	Amount	Particulars	Amount
To interest on capital A/c		By Net Profit	14040
Suresh - 9600		By interest on drawing
Ramesh - 12000	21600	Suresh -6000 x15% x 6/12 =450
		Ramesh -10000 x 15% x 6/12 = 750	1200
		By Loss t/f to
		Suresh - 3975
		Ramesh - 2385	6360
	21600		21600