A,B and c are partners sharing profits and losses in the ratio of 3:2:1. their capitals were Rs.80,000;Rs.60,000;and Rs. 40,000 respectively. according to the partnership agreement partners are entitled to receive the following:

i) interest on capital @12%

ii)salaries @Rs.300 per month to each partner

iii)interest on drawing is to be charged @12%,irrespective of the period. Partners drawings amount to Rs.8,000 for A,Rs.6,000 for B and Rs. 5000 for C.

The profit earned by the firm after charging partners salaries but before allowing interest on capital and charging interest on drawing amountsb to Rs. 44,000.prepare profit and loss appropriation account to disgtribute the profit among the partners.

Profit and Loss Appropriation Account
Dr.     Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Interest on Capital A/c:   Profit and Loss A/c
(44,000+10,800)
54,800
A 9,600   Interest on Drawings A/c:  
B 7,200   A 960  
C 4,800 19,600 B 720  
Salary to:   C 600 2,280
A 3,600      
B 3,600      
C 3,600 10,800    
Profit transferred to:      
A’s Capital A/c 13,340      
B’s Capital A/c 8,893      
C’s Capital A/c 4,447 26,680    
  57,080   57,080
       

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