Question

 L, M and N are partners in a firm sharing profits & losses in the ratio of 2 : 3 : 5. On April 1, 2016 their fixed capitals were Rs. 2,00,000, Rs. 3,00,000 and Rs. 4,00,000 respectively. Their partnership deed provided for the following:

(i) Interest on capital @ 9% per annum. 

(ii) Interest on Drawings @ 12% per annum. 

(iii) Interest on partners’ loan @ 12% per annum.

On July 1, 2016, L brought Rs. 1,00,000 as additional capital and N withdrew Rs. 1,00,000 from his capital. During the year L, M and N withdrew Rs. 12,000, Rs. 18,000 and Rs. 24,000 respectively for their personal use. On January 1, 2017 the firm obtained a Loan of Rs. 1,50,000 from M. The Net profit of the firm for the year ended March 31, 2017 after charging interest on M’s Loan was Rs. 85,000. 

Prepare Profit & Loss Appropriation Account and Partners Capital Account.

Answer 1

Profit & Loss Appropriation Account
for the year ended March 31, 2017

Particulars		Amount (Rs)	Particular		Amount (Rs)
To interest on Capital			By Profit & Loss Account - Net Profit b/d		85,000
L's Current Account	24,750		By Interest on partner's Drawings
M's Current Account	27,000		L's Current Account	720
N's Current Account	29,250	81,000	M's Current Account	1,080
			N's Current Account	1,440	3,240
To profit transferred to Partner's Current Account
L	1,448
M	2,172
N	3,620	7,240
		88,240			88,240

Partners’ Capital Account

Answer 2

Profit & Loss Appropriation Account for the year ended March 31, 2017

Partners’ Capital Account