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Question

Anwar, Biswas and Divya are partners in a firm. Their Capital Accounts stood at : Rs.8,00,000;Rs.6,00,000 and Rs.4,00,000 respectively on 1st April, 2013. They shared profits and losses in the ratio of 3:2:1 respectively. Partners are entitled to interest on capital @ 6% per annum and salary to Biswas and Divya @ Rs.4,000 per Month and Rs.6,000 per quarter respectively as per the provisions of Partnership Deed.
Biswas's share of profit including interest on capital but excluding salary is guaranteed at a minimurn of Rs.82,000 p.a. Any deficiency arising on that account shall be met by Divya. Profit for the year ended. 31st March, 2014 amounted to Rs.3,12,000. Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2014.

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Solution

Notes:- Biswa's share includes share of profit and interest on capital
Share of profit = 44,000
Add;Interest on capital= 36,000
Total = 80,000
Guaranteed amount = 82,000
The deficiency of 2000 is to be borne by Divya.

PROFIT AND LOSS APPROPRIATION ACCOUNT
Particulars Amount Particulars Amount
To Interest on capital
Anwar- 8,00,000*6%=48,000
Biswas-6,00,000*6%=36,000
Divya-4,00,000*6%=24,000
1,08,000 By net profit 3,12,000
To Partner's salary A/c
Biswas-4000*12 = 48,000
Divya-6000*4 = 24,000
72,000
To Profit Transferred to
Anwar's capital A/c- 66000
Biswa's capital A/c -44,000
Add:-Divya's share 2000
Divya = 22,000
Less:deficiency cont =(2000)
1,26,000
Total 3,12,000 Total 3,12,000

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