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Question
Lokesh and Azad are partners sharing profits in the ratio 3:2, with capitals of Rs 50,000 and Rs 30,000, respectively. Interest on capital is agreed to be paid @ 6% p.a. Azad is allowed a salary of Rs 2,500 p.a. During 2016, the profits prior to the calculation of interest on capital but after charging Azad’s salary amounted to Rs 12,500. A provision of 5% of profits is to be made in respect of manager’s commission. Prepare accounts showing the allocation of profits and partner’s capital accounts.
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Solution
Profit and Loss Adjustment Account
Dr. Cr.
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|||
|
Interest on Capital |
|
By Profit and Loss (12,500 + 2,500) |
15,000 |
|||
|
Lokesh |
3,000 |
4,800 |
|
|||
|
Azad |
1,800 |
|
||||
|
Partner’s Salaries |
2500 |
|
||||
|
Provision for |
750 |
|
||||
|
Profit transferred to |
|
|
||||
|
Lokesh Capital |
4,170 |
6,950 |
|
|||
|
Azad Capital |
2,780 |
|
||||
|
15,000 |
15,000 |
|||||
Partners’ Capital Account
Dr. Cr.
|
Particulars |
Lokesh |
Azad |
Particulars |
Lokesh |
Azad |
|
|
|
|
Balance b/d |
50,000 |
30,000 |
|
|
|
|
Interest on Capital |
3,000 |
1,800 |
|
Balance c/d |
57,170 |
37,080 |
Partner’s Salaries |
|
2,500 |
|
|
|
|
Profit and Appropriation |
4,170 |
2,780 |
|
|
57,170 |
37,080 |
|
57,170 |
37,080 |
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|
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|
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|
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| Particulars | (₹) | Particulars | (₹) |
| To Interest on Capital | By Profit & loss account (After manager’s commission) | ___(2)___ | |
| Richa | ______ | ||
| Anmol | ______ | ||
| To Anmol’s Salary a/c | 12,500 | ||
| To Profit transferred to: | |||
| Richa’s Capital A/C (1) | ___(1)___ | ||
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| ______ | ______ |
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