Question

P, Q and R are in a partnership and as at 1st April, 2017 their respective capitals were; Rs. 40,000, Rs. 30,000 and Rs. 30,000. Q is entitled to a salary of Rs. 6,000 and Rs. 4,000 p.a. payable before division of profits. Interest is allowed on capital @ 5% p.a. and is not charged on drawings. Of the divisible profits, P is entitled to 50% the first Rs. 10,000, Q to 30% and R to 20%, rest of the profits are shared equally. Profits for the year ended the 31st March, 2018, after debiting partners' salaries but before charging interest on capital was Rs. 21,000 and the partners had drawn Rs. 10,000 each on account of salaries, interest and profit.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018 showing the distribution of profit and the Capital Accounts of the Partners.

Answer 1

Profit And Loss Appropriation Account

Particulars	Amount	Particulars	Amount
To Interest on capital P = 40000*5%=2000 Q=30000*5%=1500 R=30000*5%=1500	5000	By net profit(after salary)	21000
To Profit T/f to First 10000 P=10000*50%=5000 Q=10000*30%=3000 R=10000*20%=2000 Remaining 6000 Equally i.e each 2000	16000
Total	21000	Total	21000

PARTNERS CAPITAL ACCOUNT

Particulars	P	Q	R	Particulars	P	Q	R
To drawings	10000	10000	10000	By bal b/d	40000	30000	30000
				By salaries		6000	4000
To bal c/d	39000	32500	29500	By Interest on capital	2000	1500	1500
				By P/L Appropriation A/c	7000	5000	4000
Total	49000	42500	39500