Question

Simmi and Sonu are partners in a firm, sharing profits and losses in the ratio of 3:1. The profit and loss account of the firm for the year ending March 31, 2020 shows a net profit of Rs 1,50,000. Prepare the Profit and Loss Appropriation Account by taking into consideration the following information:

1. Partners capital on April 1, 2019;
   Simmi, Rs 30,000; Sonu, Rs 60,000;
2. Current accounts balances on April 1, 2016,
   Simmi, Rs 30,000 (cr.); Sonu, Rs 15,000 (cr.);
3. Partners drawings during the year amounted to
   Simmi, Rs 20,000; Sonu, Rs 15,000;
4. Interest on capital was allowed @ 5% p.a.;
5. Interest on drawing was to be charged @ 6% p.a. at an average of six months;
6. Partners’ salaries: Simmi Rs 12,000 and Sonu Rs 9,000. Also show the partners’ current accounts.

Answer 1

Dr.	Profit and Loss Appropriation A/c for the year ending 31st March, 2020				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Simmi’s Salary		12,000	By Net Profit as per P&L A/c		1,50,000
To Sonu’s Salary		9,000	By Interest on Drawings:
To Interest on Capital:			-Simmi	600	1050
-Simmi	1,500	4,500	-Sonu	450
-Sonu	3,000
To Profit transferred to Current A/cs:
-Simmi (3/4)	94,162.50	1,25,550
-Sonu (1/4)	31,387.50
		1,50,050			1,50,050

 

Dr.	Partners’ Current Accounts				Cr.
Particulars	Simmi (₹)	Sonu (₹)	Particulars	Simmi (₹)	Sonu (₹)
Drawings	20,000	15,000	Balance b/d	30,000	15,000
Balance c/d	1,18,262.50	43,837.50	Interest on Drawings	600	450
			Salary	12,000	9,000
			Interest on Capital	1,500	3,000
			Share of Profit	94,162.50	31,387.50
Total	1,38,262.50	58,837.50	Total	1,38,262.50	58,837.50