Question

Ajay and Vijay are in partnership, sharing profits and losses in the ratio of 3 : 1. On 1st April, 2021, their capitals were ₹ 1,00,000 and ₹ 90,000. The terms of their partnership are as follows:

1. Interest on capital is to be allowed at @ 6% per annum.
2. Interest on drawings to be charged @ 4% per annum.
3. Partners to get a salary of ₹ 1,000 each per month.
4. Vijay is to get a commission of 2% on the correct net profit.
5. Any partner taking a loan from the firm is to be charged interest on it @ 8% per annum.

Ajay had borrowed ₹ 10,000 from the firm on 1st October, 2021.

Vijay had withdrawn ₹ 8,000 on 1st July, 2021.

During the year ending 31st March, 2022, the firm earned a net profit of ₹ 60,000 before any of the provisions mentioned in the partnership deed. You are required to prepare for the year ending 31st March, 2022:

1. Profit and Loss Appropriation Account.
2. Ajay’s Capital Account.

Answer 1

Dr.	Profit and Loss Appropriation Account		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Interest on Capital:		By Net Profit `[60,000 + 10,000 xx 8/100 xx 6/12]`	60,400
Ajay (1,00,000 × 6%)	6,000	By Interest on Drawings (Vijay): `(8,000 xx 4/100 xx 9/12)`	240
Vijay (90,000 × 6%)	5,400
To partner’s Salary:
Ajay (₹1,000 × 12)	12,000
Vijay (₹1,000 × 12)	12,000
To Commission to Vijay (2% of net profit before charge)	1,208
To Profit transferred to:
Ajay	18,024
Vijay	6,008
	60,640		60,640

 

Dr.	Ajay’s Capital Account		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Interest on loan	400	By Balance b/d	1,00,000
To Balance c/d	1,35,624	By Interest on Capital	6,000
		By Salary	12,000
		By Share of Profit	18,024
	1,36,024		1,36,024