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 $R s . 3, 50, 000$ . Prepare Profit and Loss Appropriation Account giving effect to the following:
(i) Each of the partner is to get remuneration of $R s . 60, 000$ 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 - $R s . 5, 00, 000; R s .5, 00, 000$ and $R s . 50, 000$ respectively.
(iii) Interest on Drawings charged was: Suresh- $R s .10, 000$ ; Sahil - $R s . 20, 000$ ; and Sumit - Rs. $25, 000$ .
(iv) Sumit is guaranteed minimum profit of $R s . 1, 50, 000$ after above appropriations.

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Solution

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
(600003) 1,80,000 By Net Profit 3,50,000
To Interest on Capital
Suresh- 5,00,00010%
Sahli- 5,00,00010%
Sumit- 50,00010% 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

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Particulars	Amount	Particulars	Amount
To Remuneration (60000*3)	1,80,000	By Net Profit	3,50,000
To Interest on Capital Suresh- 5,00,00010% Sahli- 5,00,00010% 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