Question

Moli, Bhola and Raj were partners in the firm sharing profits and losses in the ratio of 3 : 3: 4. Their partnership deed provided for the following:

1) Interest on capital @ 5% p.a.

2) Interest on drawing @ 12% p.a

3) Interest on partners' loan @ 6% p. a.

4) Moli was allowed an annual salary of Rs 4,000; Bhola was allowed a commission of 10% of net profit as shown by Profit and Loss Account and Raj was guaranteed a profit of Rs 1,50,000 after making all the adjustments as provided in the partnership agreement. Their fixed capitals were Moli: Rs 5,00,000; Bhola : Rs 8,00,000 and Raj : Rs 4,00,000. On 1st April 2016, Bhola extended a loan of  Rs 1,00,000 to the firm. The net profit of the firm for the year ended 31st March 2017 before interest on Bhola's loan was Rs 3,06,000.
Prepare Profit and Loss Appropriation Account of Moli, Bhola and Raj for the year ended 31st March 2017 and their Current Accounts assuming that Bhola withdrew Rs 5,000 at the end of each month, Moli withdrew Rs 10,000 at the end of each quarter and Raj withdrew Rs 40,000 at the end of each half year.

Answer 1

 

In the books of Moli, Bhola & Raj Profit & Loss Appropriation Account for the year ended 31st March 2017
Dr.			Cr.
Particulars	Rs	Particulars	Rs
To Interest on Capital: Moli’s Current     25,000 Bhola’s Current  40,000 Raj’s Current     20,000   Moli’s Salary  Bhola’s Commission Profit transferred to: Moli’s Current (56,550 – 37,300)               19,250 Bhola’s Current (56,550 – 37,300)            19,250 Raj’s Current (75,400+37,300+37,300)   1,50,000	85,000 4,000 30,000	By Net Profit (P/L A/c) By Interest on Drawing    Moli’s Current      1,800    Bhola’s Current   3,300    Raj Current         2,400	3,00,000       7,500
	3,07,500		3,07,500

 

Partner’s Current Account
Dr.						Cr.
Moli	Bhola	Raj	Particulars	Moli	Bhola	Raj
60,000 1,800	40,000 3,300 45,950	80,000 2,400 87,600	By P/L Appropriation (IOC) By P/L Appropriation (Salary) By P/L Appropriation (Commission) By P/L Appropriation (Divisible profit) By Balance c/d	25,000   4,000       19,250 13,550	40,000       30,000   19,250	20,000           1,50,000
61,800	89,250	1,70,000		61,800	89,250	1,70,000

Partner’s Capital A/c

Particulars	Moli	Bhola	Raj	Particulars	Moli	Bhola	Raj
To Balance c/d	5,00,000	8,00,000	4,00,000	By Balance b/d	5,00,000	8,00,000	4,00,000
	5,00,000	8,00,000	4,00,000		5,00,000	8,00,000	4,00,000

Working Note:

Moli = 5,00,000 X 5/100 = 25,000

Bhola = 8,00,000 X 5/100 = 40,000

Raj = 4,00,000 X 5/100 = 20,000

Calculation of interest on Bhola’s loan:

1,00,000 X 6/100 = 6,000

Calculation of interest on drawings:

Moli = (10,000 X 4) X 12/100 X 4.5/12 = 40,000 X 12/100 X 4.5/12 = 1,800

Bhola  = (5,000 X 12) X 12/100 X 5.5/12 = 60,000 X 12/100 X 5.5/12 = 3,300

Raj = (40,000 X 2) X 12/100 X 3/12 = 80,000 X 12/100 X 3/12 = 2,400

Calculation of commission of Bhola:      

(3,06,000 – 6,000) X 10/100 = 30,000     

Distribution of Profit:

Moli = 1,88,500 X 3/10 = 56,550 -37,300 = 19,250

Bhola = 1,88,500 X 3/10 = 56,550 – 37,300 = 19,250

Raj = 1,88,500 X 4/10 = 75,400 + 74, 600 = 1,50,000

Deficiency of Raj’s Profit Rs. 74,600 borne by Moli and Bhola in 3 : 3 (1 : 1).

Moli = 74,600 X ½ = -37,300

Bhola = 74,600 X ½ = 37,300