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 Appropriation Account

for the year ended March 31, 2011

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital:

Profit and Loss A/c

X

50,000

(Net Profit) (4,00,000 + 24,000)

4,24,000

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

4,24,000

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Profit and Loss Appropriation A/c

Dr.

1,25,000

To X’s Capital A/c

50,000

To Y’s Capital A/c

50,000

To Z’s Capital A/c

25,000

(Interest paid to X, Y and Z)

Profit and Loss Appropriation A/c

Dr.

24,000

To Z’s Capital A/c

24,000

(Salary paid to Z)

Profit and Loss Appropriation A/c

Dr.

2,75,000

To X’s Capital A/c

1,10,000

To Y’s Capital A/c

1,10,000

To Z’s Capital A/c

55,000

(Profit transferred to X, Y and Z)