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Moli, Bhola and Raj Were Partners in the Firm Sharing Profits and Losses in the Ratio of 3 : 3: 4. Their Partnership Deed Provided for the Following: 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. - CBSE (Arts) Class 12 - Accountancy

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Question

Moli, Bhola and Raj were partners in the firm sharing profits and losses in the ratio of 3 : 3: 4. Their partnership deed provided for the following:

1) Interest on capital @ 5% p.a.

2) Interest on drawing @ 12% p.a

3) Interest on partners' loan @ 6% p. a.

4) 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.

Solution

 

In the books of Moli, Bhola & Raj
Profit & Loss Appropriation Account
for the year ended 31st March 2017

Dr.   Cr.
Particulars Rs  Particulars Rs

To Interest on Capital:

Moli’s Current     25,000

Bhola’s Current  40,000

Raj’s Current     20,000  

Moli’s Salary 

Bhola’s Commission

Profit transferred to:

Moli’s Current (56,550 – 37,300)               19,250

Bhola’s Current (56,550 – 37,300)            19,250

Raj’s Current (75,400+37,300+37,300)   1,50,000

 

 

 

85,000

4,000

30,000

 

 

 

 

By Net Profit (P/L A/c)

By Interest on Drawing

   Moli’s Current      1,800

   Bhola’s Current   3,300

   Raj Current         2,400

 

 

 

 

 

3,00,000

 

 

 

7,500

 

 

 

 

 

  3,07,500   3,07,500

 

Partner’s Capital Account
Dr.   Cr.
Particulars Moli Bhola Raj Particulars Moli Bhola Raj

To Drawings

To P/L Appropriation

To Balance c/d

 

 

 

 

 

 

60,000

1,800

 

 

 

 

 

 

 

40,000

3,300

45,950

 

 

 

 

 

 

80,000

2,400

87,600

 

 

 

 

 

 

By P/L Appropriation

(IOC)

By P/L Appropriation

(Salary)

By P/L Appropriation

(Commission)

By P/L Appropriation

(Divisible profit)

By Balance c/d

 

25,000

 

4,000

 

 

 

19,250

13,550

 

40,000

 

 

 

30,000

 

19,250

 

 

20,000

 

 

 

 

 

1,50,000

 

  61,800 89,250 1,70,000   61,800 89,250 1,70,000
           

 

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Solution Moli, Bhola and Raj Were Partners in the Firm Sharing Profits and Losses in the Ratio of 3 : 3: 4. Their Partnership Deed Provided for the Following: 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. Concept: Preparation of Profit and Loss Appropriation Account.
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