Amitabh and Babul are partners sharing profits in the ratio of 3:2, with capitals of Rs. 50,000 and Rs. 30,000 respectively. Interest on capital is agreed @ 6% p.a. Babul is to be allowed an annual salary of Rs. 2,500. During the year 2016-17, the profits prior to the calculation of interest on capital but after charging Babul’s salary amounted to Rs. 12,500. A provision of 5% of the profit is to be made in respect of commission to the Manager.Prepare Profit and Loss Appropriation account showing the distribution ofprofit and the partners’ capital accounts for the year ending March 31, 2017.

Amitabh and Babul are partners sharing profits in the ratio of 3:2, with capitals of Rs. 50,000 and Rs. 30,000 respectively. Interest on capital is agreed @ 6% p.a. Babul is to be allowed an annual salary of Rs. 2,500. During the year 2016-17, the profits prior to the calculation of interest on capital but after charging Babul’s salary amounted to Rs. 12,500. A provision of 5% of the profit is to be made in respect of commission to the Manager.Prepare Profit and Loss Appropriation account showing the distribution ofprofit and the partners’ capital accounts for the year ending March 31, 2017.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter12: Accounting For Partnerships And Limited Liability Companies

Section: Chapter Questions

Problem 3PA

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Lokesh and Azad are partners sharing profits in the ratio 3:2, with capitals ofRs. 50,000 and 30,000, respectively. Interest on capital is agreed to be paid @ 6% p.a. Azad is allowed a salary of Rs. 2,500 p.a. During 2016, the profitsprior to the calculation of interest on capital but after charging Azad’s salaryamounted to Rs. 12,500. A provision of 5% of profits is to be made in respect of manager’s commission. Prepare accounts showing the allocation of profits and partner’s capital accounts.
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