Sarthaks Test
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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.

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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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