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Question

X and Y are partners sharing profit and loss at the ratio of 1/3 and 2/3 respectively. The net income for this accounting period is Rs 10,000 while salary of X = Rs 2,000, interest on Y's drawings = Rs 3,000 and interest on X's capital = Rs 2,000. What is the X's share of profit or loss after the adjustment for partner's salary, interest on capital and interest on drawings?

A
3,000
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B
6,000
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C
9,000
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D
2,000
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Solution

The correct option is A 3,000
X and Y share profit & loss in a 1:2 ratio. Salary of X is Rs2,000 along with interest on his capital of Rs2,000. Y has to pay interest on drawings of Rs3,000 and firm earned Rs10,000 ass profits.
Profit & Loss Appropriation a/c
Particulars (Dr.) Amount Particulars (Cr.) Amount
To Interest on capital a/c (X)
To salary a/c (X)
To profit on appropriation
X's capital a/c 3,000
Y's capital a/c 6,000
2,000
2,000
9,000
By p/l a/c
By interest on drawings a/c (Y)
10,000
3,000
Thus, X's share of profit after all appropriations is Rs3,000


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