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+2 votes
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X, Y and Z are partners in a firm sharing profits in 2 : 2 : 1 ratio. The fixed capitals of the partners were Rs. 5,00,000; Y Rs.5,00,000 and Z Rs.2,50,000. The Partnership Deed provides that interest on capital should be allowed @ 10% p.a. and that Z should be allowed a salary of Rs.2,000 per month. The profits of the firm form the year ended 31st March, 2015 after debiting Z’s salary were Rs.4,00,000. Prepare Profit and Loss Appropriation Account.

2 Answers

+1 vote
by (17.0k points)
selected by
 
Best answer

Profit and Loss Appropriation a/c
(for the year ended 31st March,2018)

Particulars Amount (Dr.) Particulars  Amount (Cr.) 
To Interest on Capital:
- X
- Y
- Z

50000
50000
25000
By Profit and Loss a/c
(after charging Z's salary)
400000 
To Profit transferred to:
- X's Capital a/c
- Y's Capital a/c 
- Z's Capital a/c

110000
110000
55000
400000 400000 

Working Notes:

1. Salary to Z has not been debited to profit and loss appropriation accounts because profit of Rs. 4,00,000 is given after adjusting the Z's salary.

2. Calculation of interest on capital

Interest on X's capital = 5,00,000 × 10/100 = ₹50,000

Interest on Y's capital = 5,00,000 × 10/100 = ₹50,000

Interest on Z's capital = 2,50,000 × 10/100 = ₹25,000

3. Calculation of profit share of each Partner

Divisible of profit after interest on capital = Rs.4,00,000 -1,25,000 = 2,75,000

Profit sharing ratio = 2:2:1

X's profit share = 2,75,000 × 2/5 = ₹1,10,000

Y's profit share = 2,75,000 × 2/5 = ₹1,10,000

Z's profit share = 2,75,000 × 1/5 = ₹55,000

+2 votes
by (106k points)

Working Notes:

1. salary to z has not been debited to profit and loss appropriation accounts because profit of Rs. 4,00,000 is given after adjusting the Z ,S salary.

2.calculation of interest on capital

3. Calcuation of profit share of each parther 

Divisible of profit after interest on capital = Rs.4,00,000 -1,25,000 = 2,75,000

profit sharing ratio = 2:2:1

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