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Moli, Bhola and Raj Were Partners in a Firm Sharing Profits and Losses in the Ratio of 3 : 3 : 4. Their Partnership Deed Provided for the Following : - Accountancy


Moli, Bhola and Raj were partners in a firm sharing profits and losses in the ratio of 3 : 3 : 4. Their partnership deed provided for the following :
(i) Interest on capital @ 5% p.a.
(ii) Interest on drawing @ 12% p.a.
(iii) Interest on partners' loan @ 6% p.a.
(iv) 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.

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Solution

In the books of Moli, Bhola & Raj

Profit and Loss Account 

for the year ended 31st March’ 2017

Dr.                                                                                                     Cr

 Particulars Amount (Rs) Particulars  Amount (Rs)
Interest on Bhola's Loan 6,000    Net Profit 3,06,000
Net Profit transferred to P/L Appropriation A/c 3,00,000    
    3,06,000     3,06,000
       

           

        In the books of Moli, Bhola & Raj P\L Appropriation A\c 

Particulars

Amount (Rs)

Particulars

Amount (Rs)

Interest on Capital:

 

 

Net Profit transferred from P/L A/c

 

3,00,000

Moli's Current

25000

 

Interest on Drawing

 

Bhola's Current

40000

 

Moli's Current

1800

 

Raj's Current

20000

85000

Bhola's Current

3300

 

Moli's Salary

 

4000

Raj's Current

2400

7500

Bhola's Commission

 

30000

 

 

 

Profit transferred to:

 

 

 

 

 

Moli's Current (56550 - 37300)

19250

 

 

 

 

Bhola's Current (56550 - 37300)

19250

 

 

 

 

Raj's Current (75400 + 37300 + 37300)

150000

1,88,500

 

 

 

 

 

 

 

 

 

 

 

3,07,500

 

 

,07,500

 

                                    Partners' Current Account 

Dr.

 

 

 

 

Cr.

Particulars

Moli

Bhola

Raj

Particulars

Moli

Bhola

Raj

 

 

 

 

 

 

 

 

By Drawings

60,000

40,000

80,000

By Profit & Loss Appropriation A/c-IOC

25,000

40,000

20,000

By Profit & Loss Appropriation A/c-IOD

1800

3300

2400

By Profit & Loss Appropriation A/c-Salary

4,000

 

 

By Balance c/d

 

45,950

87,600

By Profit & Loss Appropriation A/c-Commission

 

30,000

 

 

 

 

 

By Profit & Loss Appropriation A/c-Divisible Profit

19250

19250

150000

 

 

 

 

By Balance c/d

13,550

 

 

 

61,800

89,250

1,70,000

 

61,800

89,250

1,70,000

 

 

 

 

 

 

 

 

 

Concept: Dissolution of Partnership Firm
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