Question

Bhanu and Partab are partners sharings profits eqully. Their fixed capitals as on 1st April, 2017 are Rs. 8,00,000 and Rs. 10,00,000 respectively. Their drawings the year were Rs. 50,000 and Rs. 1,00,000 respectively. Interest on Capital is a charge and is to be allowed @ 10% p.a. and interest on drawings is to be charged @ 15% p.a. Profit for the year ended 31st March, 2018 was Rs. 1,20,000. Prepare Profit and Loss Appropriation Account.

Answer 1

Profit and Loss Appropriation Account
for the year ended March 31, 2018

Dr.				Cr.
Particulars			Amount Rs	Particulars		Amount Rs
Interest on Capital A/c:				Profit and Loss A/c		1,20,000
Bhanu’s Current A/c		80,000		Interest on Drawings A/c:
Partap’s Current A/c		1,00,000	1,80,000	Bhanu’s Current A/c	3,750
				Partap’s Current A/c	7,500	11,250
				Loss transferred to
				Bhanu’s Current A/c	24,375
				Partap’s Current A/c	24,375	48,750
			1,80,000			1,80,000

Answer 2

Working Notes:

1. calculation of interest on Drawing of each partner

In the no given of dates of drawings interest thereon has been calculated for the average

1. calculation of interest on Capital of each partner

Interest on capital is a charge against profit. thus,will be debited to profit and loss account