Question

Anita, Bimla and Cherry are three partners. On 1st April, 2017, their Capitals stood as: Anita Rs. 1,00,000, Bimla Rs. 2,00,000 and Cherry Rs. 3,00,000. It was decided that: (a) they would receive interest on Capital @ 5% pa., (b) Anita would get a salary of Rs. 5,000 per month, (c) Bimla would receive commission @ 5% of net profit after deduction of commission, (d) 10% of the divisible profit would be transferred to the General Reserve. . Before the above items were taken into account, the profit for the year ended 31st March, 2018 was Rs. 5,00,000. Prepare Profit and Loss Appropriation Account and the Capital Accounts of the Partners.

Answer 1

PROFIT AND LOSS APPROPRIATION ACCOUNT

Particulars	Amount	Particulars	Amount
To interest on capital Anita-100000*5%=5000 Bimla-200000*5%=10000 Cherry-300000*5% =15000	30000	By net profit	500000
To salary(5000*12)	60000
To commission(500000*5/105)	23809
To General Reserve(Notes)	38619
To profit T/f to Anita's capital A/c=115857 Bimla's capital A/c=115857 Cherry's capital A/c=115858	347572

Notes:- 500000-30000-60000-23809=386191*10%=38619

PARTNERS CAPITAL ACCOUNTS

Particulars	Anita	Bimla	Cherry	Particulars	Anita	Bimla	Cherry
				By balance b/d	100000	200000	300000
				By interest on capital	5000	10000	15000
				By salary	60000
				By commission		23809
To balance c/d	280857	349666	430857	By P/L Appropriation A/c	115857	115857	115858
Total	280857	349666	430858	Total	280857	349666	430858