X,Y,Z are partners in a firm sharing profits in 2:2:1 ratio. the fixed capitals of the partners were : X- rs. 500000 ; Y- rs . 500000 ; Z- rs. 250000. The partnership deed provides that interest on capital should be allowed @ 10 % p.a. and that Z should be allowed a salary of rs. 2000 per month . the profits of the firm for the year ended 31st march 2011 after debiting Z's salary were Rs. 400000. Prepare the profit and loss appropriation account.
Profit and Loss Appr Account
for the year ended Mar
Dr.
Particulars Amount
Rs
Interest on Capital:
X 50,000
Y 50,000
Z 25,000 1,25,000
Salary to Z (2,000 ? 12) 24,000
Profit transferred to:
X?s Capital A/c 1,10,000
Y?s Capital A/c 1,10,000
Z?s Capital A/c 55,000 2,75,000
4,24,000
Working Notes:
Calculation of Interest on Capital of Partners
Journal
Date Particulars L.F.
Profit and Loss Appropriation A/c Dr.
To X?s Capital A/c
To Y?s Capital A/c
To Z?s Capital A/c
(Interest paid to X, Y and Z)
Profit and Loss Appropriation A/c Dr.
To Z?s Capital A/c
(Salary paid to Z)
Profit and Loss Appropriation A/c Dr.
To X?s Capital A/c
To Y?s Capital A/c
To Z?s Capital A/c
(Profit transferred to X, Y and Z)
also give the required journal entries .
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