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.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
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 the partners’ capital accounts for the year ending March 31, 2017.
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