Question

$A$ and $B$ are partners sharing profits and losses in the ratio of $3:2$ with capitals of $Rs.4,00,000$ and $Rs.3,00,000$ respectively. Interest on capital is agreed @ $5\%$ p.a. $B$ is to be allowed an annual salary of $Rs.30,000$ which has not been withdrawn. Profit for the year ending 31st March, 2018 prior to calculation of interest on capital but after charging B's salary is $Rs.1,20,000$. A provision of $5\%$ of the profit is to be made in respect of commission to the manager. Prepare an account showing the appropriation of profit.

Answer 1

Profit and Loss Account

Particulars	Amount	Particulars	Amount
To Mangers commission A/c-5%*1,50,000	7500	By profit(1,20,000+30,000)	1,50,000
To Net profit transferred to P&L APP A/c	1,42,500
Total	1,50,000	Total	1,50,00

PROFIT AND LOSS APPROPRIATION ACCOUNT

Particulars	Amount	Particulars	Amount
To B's salary A/c	30,000	By Net profit (1,20,000+30,000)*5%=7500 1,50,000-7500	1,42,500
To Interest on capital A/c A- 4,00,000*5%=20,000 B- 3,00,000*5%=15,000	35,000
To profit transferred to A's capital A/c- 46,500 B's capital A/c - 31,000	77,500