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Question
Anshul and Asha are partners sharing profits and losses in the ratio of 3 : 2. Anshul being a non-working a - partner contributed Rs. 8,00,000 as her capital. Asha being working partner did not contribute capital. The Partnership Deed provides for interest on capital @ 5% and salary to every working partner @ Rs.2,000 per month. Net profit before providing for interest on capital and partner's salary for the year ended 31st March, 2018 was Rs. 32,000. Show distribution of profits.
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Solution
PROFIT AND LOSS APPROPRIATION ACCOUNT Particulars Amount Particulars Amount To Interest on capital
(32,000*5/8) 20000 By net profit 32000 To salary(32,000*3/8) 12000 Total 32,000 Total 32,000
Interest on Anshul's capital = 8,00,000*5%= 40,000Salary to Asha = 2000*12=24,000
As profit available is less than the appropriation to be made, the appropriation are to be made in the ratio of interest on capital and salary i.e 40,000:24000 = 5:3
| Particulars | Amount | Particulars | Amount |
| To Interest on capital (32,000*5/8) | 20000 | By net profit | 32000 |
| To salary(32,000*3/8) | 12000 | ||
| Total | 32,000 | Total | 32,000 |
Salary to Asha = 2000*12=24,000
As profit available is less than the appropriation to be made, the appropriation are to be made in the ratio of interest on capital and salary i.e 40,000:24000 = 5:3
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