Sarthaks Test
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A, B and C were partners in a firm having capitals of Rs.50,000; Rs.50,000 and Rs.1,00,000 respectively. Their Current Account balances were A: Rs.10,000; B: 5,000 and C: 2,000 (Dr.). According to the Partnership Deed the partners were entitled to an interest on Capital @ 10% p.a. C being the working partner was also entitled to a salary of Rs.12,000 p.a. 

The profits were to be divided as: 

a. The first Rs.20,000 in proportion to their capitals. 

b. Next Rs.30,000 in the ratio of 5 : 3 : 2. 

c. Remaining profits to be shared equally. 

The firm made a profit of Rs.1,72,000 before charging any of the above items. Prepare Profit and Loss Appropriation Account and pass necessary Journal entry for the appropriation of profits.

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Working notes:

1. calculation of interest on capital

Therefore,

Total profit share of A = 5,000+15,000+30,000= Rs. 50,000

Total profit share of  B = 5,000+9,000+30,000 = Rs.44,0000

Total profit share of c= 10,000+6,000+30,000 = Rs. 46,0000

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