Anand and Narayanan are partners in a firm sharing profits and losses in the ratio of 5 : 3. On 1st January 2018, their capitals were Rs. 50,000 and Rs. 30,000, respectively. The partnership deed specifies the following:
1. Interest on capital is to be allowed at 6% per annum.
2. Interest on drawings charged to Anand and Narayanan are Rs. 1,000 and Rs. 800, respectively.
3. The net profit of the firm before considering interest on capital and interest on drawings amounted to Rs. 35,000.
Give necessary journal entries and prepare profit and loss appropriation account as on 31st December 2018. Assume that the capitals are fluctuating.
