Anand, Bhaskar and Dinkar are partners in a firm. On 1st April 2011 the balance in their capital accounts stood at Rs. 10,00,000, Rs 8,00,000 and Rs.6,00,000 respectively. They shared profits in the proportion of 5 4 3 respectively. Partners are entitled to interest on capital @ 10+ per annum and salary to Bhaskar @ Rs 4,000 per month and a commission of Rs.16,000 per quarter to Dinkar as per the provisions of the partnership deed. Anand’s share of profit (excluding interest on capital) is guaranteed at not less than Rs.1,90,000 p.a. Bhaskar’s share of profit (including interest on capital but excluding salary) is guaranteed at not less than Rs 2,45,000 p.a. Any deficiency arising on that account shall be met by Dinkar. The profits of the firm for the year ended 31st March 2012 amounted to Rs.8,32,000. Prepare Profit and Loss Appropriation Account’ for the year ended 31st March 2012
Dear Student
Regards
Profit and Loss Appropriation A/c | |||||||
Date | Particulars | Amount | Date | Particulars | Amount | ||
(Rs) | (Rs) | ||||||
Salary of Bhaskar | 48,000 | Net profit | 832,000 | ||||
Commission of Dinkar | 64,000 | ||||||
Interest on Capital | |||||||
Anand | 100,000 | ||||||
Bhaskar | 80,000 | ||||||
Dinkar | 60,000 | 240,000 | |||||
Profit Transferred | |||||||
Anand | 200,000 | ||||||
Bhaskar | 165,000 | ||||||
Dinkar | 115,000 | 480,000 | |||||
832,000 | 832,000 |
Statement of working | ||
Particulars | Amount | |
Profit before Appropriation | 832,000 | |
Less : Interest on Capital | ||
Anand | 10,00,000 x 10% | (100,000) |
Bhaskar | 8,00,000 x 10% | (80,000) |
Dinkar | 6,00,000 x 10% | (60,000) |
Less : Salary to Bhaskar | 4,000 x 12 | (48,000) |
Less : Commission to Dinkar | 16,000 x 4 | (64,000) |
Profit left to be transferred to partners | 480,000 | |
Appropriation as Per PSR (5:4:3) | ||
Anand | 200,000 | |
Bhaskar | 160,000 | |
Dinkar | 120,000 | |
Profit (Share of Profit) guaranteed to Anand | 190,000 | |
Actual Share of Anand | 200,000 | |
Deficiency | - | |
Profit (Share of Profit + Interest on Capital) guaranteed to Bhaskar | 245,000 | |
Profit (Share of Profit + Interest on Capital) to Bhaskar as per above calculation | 1,60,000 + 80,000 | 240,000 |
Deficiency in Bhaskar's share to be borne by Dinkar | 5,000 | |
Therefore Actual Transfer to Capital accounts from Profit and Loss Appropriation Account | ||
Anand's Share | 200,000 | |
Bhaskar's Share | 160,000 | |
Add : Deficiency borne by Dinkar | 5,000 | |
Net Profit / (Loss) to Bhaskar | 165,000 | |
Dinkar's Share | 120,000 | |
Less : Deficiency of Bhaskar | (5,000) | |
Net Profit / (Loss) to Dinkar | 115,000 |
Regards