Question

Suresh, Sahil and Sumit are partners sharing profits in the ratio of $5:3:2$. During the year ended 31st March, 2018, the firm earned profit of $Rs.3,50,000$. Prepare Profit and Loss Appropriation Account giving effect to the following:
(i) Each of the partner is to get remuneration of $Rs.60,000$ p.a.
(ii) Interest on Capital is to be allowed @ $10\%$ p.a. Capitals of Suresh, Sahil and Sumit as on 1st April, 2017 were - $Rs.5,00,000;Rs.5,00,000$ and $Rs.50,000$ respectively.
(iii) Interest on Drawings charged was: Suresh- $Rs.10,000$; Sahil - $Rs.20,000$; and Sumit - Rs. $25,000$.
(iv) Sumit is guaranteed minimum profit of $Rs.1,50,000$ after above appropriations.

Answer 1

After the guaranteed profit to Sumit,the remaining profit shall be distributed to Suresh and Sahli will be distributed in the ratio of 5:3.

PROFIT AND LOSS APPROPRIATION ACCOUNT

Particulars	Amount	Particulars	Amount
To Remuneration (60000*3)	1,80,000	By Net Profit	3,50,000
To Interest on Capital Suresh- 5,00,000*10% Sahli- 5,00,000*10% Sumit- 50,000*10%	1,05,000	By Interest on Drawings Suresh-10,000 Sahli-20,000 Sumit-25,000	55,000
To Sumit's capital (Guaranteed Profit)	1,50,000	By Loss transferred to Suresh-62,500 Sahli- 37,500	1,00,000
Total	5,05,000	Total	5,05,000