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Question
X, Y and Z entered into partnership on 1st October, 2017 to share profits and losses in the ratio of 4 : 3 : 3. X, personally guaranteed that Z's share of profit after charging interest on capital @ 10% p.a. would not be less then ₹ 80,000 in any year. The capital contributions were: X–₹ 3,00,000, Y–₹ 2,00,000 and Z–₹ 1,50,000.
The profit for the year ended 31st March, 2018 amounted to ₹ 1,60,000. Prepare Profit and Loss Appropriation Account.
The profit for the year ended 31st March, 2018 amounted to ₹ 1,60,000. Prepare Profit and Loss Appropriation Account.
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Solution
Profit and Loss Appropriation Account
for the year ended March 31, 2018
Dr.
Cr.
Particulars
Amount
(Rs)
Particulars
Amount
(Rs)
Interest on Capital:
Net Profit b/d
1,60,000
X
15,000
Y
10,000
Z
7,500
32,500
Profit transferred to:
X (51,000 – 1,750)
49,250
Y (38,250)
38,250
Z (38,250 + 1,750)
40,000
1,27,500
1,60,000
1,60,000
Note: Since Z is admitted on 1st October, 2017 and Profit is ascertained on March 31, 2018, therefore, interest on capital is calculated for 6 months and guaranteed amount is considered as Rs 40,000 (half of the total amount).
|
Profit and Loss Appropriation Account for the year ended March 31, 2018 |
||||
|
Dr. |
|
Cr. |
||
|
Particulars |
Amount (Rs) |
Particulars |
Amount (Rs) |
|
|
Interest on Capital: |
|
Net Profit b/d |
1,60,000 |
|
|
X |
15,000 |
|
|
|
|
Y |
10,000 |
|
|
|
|
Z |
7,500 |
32,500 |
|
|
|
|
|
|
|
|
|
Profit transferred to: |
|
|
|
|
|
X (51,000 – 1,750) |
49,250 |
|
|
|
|
Y (38,250) |
38,250 |
|
|
|
|
Z (38,250 + 1,750) |
40,000 |
1,27,500 |
|
|
|
|
1,60,000 |
|
1,60,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Since Z is admitted on 1st October, 2017 and Profit is ascertained on March 31, 2018, therefore, interest on capital is calculated for 6 months and guaranteed amount is considered as Rs 40,000 (half of the total amount).
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