Question

$A,B$, and $C$ are partners in a firm. According to the Partnership Deed, the partners are entitled to draw $Rs.7,000$ per month. On the 1st day of every month $A,B$ and $C$ drew $Rs.7,000;Rs.6,000$ and $Rs.5,000$ respectively. Interest on capitals and interest on drawings are fixed @ $8\%$ and $10\%$ respectively. Profit for the year ended 31st March, 2018 was $Rs.7,55,000$ out of which $Rs.2,00,000$ are to be transferred to General Reserve. $B$ and $C$ are entitled to receive salary of $Rs.30,000$ and $Rs.45,000$ p.a. respectively and $A$ is entitled to receive commission @ $10\%$ on net distributable profits after charging such commission. On 1st April, 2017, the balances of their Capital Accounts were $Rs.5,00,000;Rs.4,00,000$ and $Rs.3,50,000$ respectively. Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018 and Capital Accounts of Partners in the books of the firm.

Answer 1

PROFIT AND LOSS APPROPRIATION ACCOUNT

Particulars	Rs	Particulars	Rs
To, General Reserve A/c	200000	By Profit and loss A/c (Net Profit)	755000
To, Interest on Capital A/c A ( 500000*8%) 40000 B ( 400000*8%) 32000 C ( 350000*8%) 28000	100000	By Interest on Drawing A/cs (WN 1) A (84000*10%*6.5/12) 4,550 B (72000*10%*6.5/12) 3,900 C (60000*105*6.5/12) 3,250	11,700
To, Partners Salary A/c B 30000 C 45000	75000
To, A's Commission A/c (WN 3)	35,609
To, Profit transferred to: A's Capital A/c 1,18,697 B's Capital A/c 1,18,697 C's Capital A/c 1,18,697	3,56,091
	7,66,700		7,66,700

PARTNERS CAPITAL ACCOUNT

Particulars	A	B	C	Particulars	A	B	C
To, Drawings A/c	84,000	72000	60000	By, Balance b/d	500000	400000	350000
To, Interest on Drawings A/c	4,550	3,900	3,250	By, Interest on capital A/c	40000	32000	28000
To, Balance c/d	6,05,756	4,74,797	4,78,447	By, Partners Salary A/c	_	30000	45,000
				By, A's Commission A/c	35,609	_	_
				By, Profit and loss Appropriation A/c	118697	118697	118697
Total	6,94,306	5,50,697	5,41,697	Total	6,94,306	5,50,697	5,41,697