Question

Bat and Ball are partners sharing the profits in the ratio of $2:3$ with capitals of $Rs.1,20,000$ and $Rs.60,000$ respectively. On 1st October, 2017, Bat and Ball granted loans of $Rs.2,40,000$ and $Rs.1,20,000$ respectively to the firm. Bat had allowed the firm to use his property for business for a monthly rent of $Rs.5,000$. The loss for the year ended 31st March, 2018 before rent and interest amounted to $Rs.9,000$. Show distribution of profit/loss.

Answer 1

Profit and Loss Appropriation account

(for the year ended 31st March, 2018)
Dr. Cr.

Particulars	Amount	Particulars	Amount
To Loss b/d (before interest)	9000	By loss transferred to: - Bat's Capital a/c - Balls' Capital a/c	7920 11880
To interest on Bat's loan	7200
To interest on Balls' loan	3600
	19800		19800

Working Note:

1. Interest on Bat's loan for 6 months= 240000 * 6/100 * 6/12 = 7200

2. Interest on Ball's loan for 6 months= 120000 * 6/100 * 6/12= 3600