Question

Akhil and Nikhil were partners sharing profits and losses in the ratio of 3 : 2. Their fixed capitals ‘were ₹ 1,00,000 and ₹ 80,000 respectively. Interest on capital was agreed @ 6% p.a. Nikhil was to be allowed an annual salary o f₹ 9,200 During the year 2021-22, the net profit prior to the calculation of interest on capital but after charging Nikhil’s salary amounted to ₹1,20,000.

Prepare Profit and Loss Appropriation Account of the firm for the year ending 31^st March, 2022.

Answer 1

Dr.	Profit and Loss Appropriation Account for the year ended 31st March, 2022				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Interest on Capital A/cs:			By Profit and Loss A/c	1,20,000	1,29,200
Akhil's Current A/c	6,000	10,800	Add: Nikhil's Salary	9,200
Nikhil's Current A/c	4,800
To Nikhil's Current A/c (Salary)		9,200
To Profit Transferred to:
Akhil's Current A/c (3/5)	65,520	1,09,200
Nikhil's Current A/c (2/5)	43,680
		1,29,200			1,29,200

Working Notes: 

1. Interest on Akhil's Capital =`₹ 1,00,000 xx 6/100 = ₹ 6,000 `
2. Interest on Nikhil's Capital = `₹ 80,000 xx 6/100 = ₹ 4,800`