Question

D, E and F were partners in a firm sharing profits in the ratio of 5:7:8. Their fixed capitals were D Rs.5,00,000; E Rs.7,00,000 and F Rs.8,00,000. Their Partnership Deed provided for the following: 

i. Interest on capital @ 10% p.a. 

ii. Salary of Rs.10,000 per month of F. 

iii. Interest on drawing @ 12% p.a. 

D withdrew Rs.40,000 on 31st January, 2009; E withdrew Rs.50,000 on 31st March, 2009 and F withdrew Rs.30,000 on 31st December, 2009. During the year ended 31st December, 2009 the firm earned a profit of Rs. 3,50,000. Prepare Profit and Loss Appropriation Account for the year ended 31st December, 2009.

Answer 1

Working notes:

1.Calculation of interest on capital

2.Calculation of interest on drawings

No Interest shall be charged on f's drawings .this is because F withdrew the amount at the end of year (on december 31 2009.)

3. Calculation of profit share of each partner

Profit available for distribution =3,50,000+8,900-2,00,000=38,900

Profit sharing ratio = 5:7:8