Question

On 1st April, 2023, A and B commenced business with capitals of ₹ 6,00,000 and ₹ 2,00,000, respectively. On 31st March, 2024, the net profit (before taking into account the provisions of deed) was ₹ 2,40,000. Interest on capitals is to be allowed at 6% p.a. B was entitled to a salary of ₹ 60,000 p.a. The drawings of the partners A and B were ₹ 60,000 and ₹ 40,000, respectively. The interest on drawings for A being ₹ 2,000 and B ₹ 1,000. Assuming that A and B are equal partners, prepare the Profit and Loss Appropriation A/c and Partner’s Capital Accounts as at 31st March, 2024.

Answer 1

Dr.	Profit and Loss Appropriation Account for the year ending 31st March, 2024				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Interest on Capital:		48,000	By Net Profit		2,40,000
A	36,000		By Interest on drawings A/c		3,000
B	12,000		A	2,000
To Salary to B		60,000	B	1,000
To Profit Transferred to:		1,35,000
A	67,500
B	67,500
		2,43,000			2,43,000

 

Dr.	Partner’s Capital Accounts				Cr.
Particulars	A	B	Particulars	A	B
To Drawings A/c	60,000	40,000	By Balance b/d	6,00,000	2,00,000
To Interest on drawings A/c	2,000	1,000	By Interest on Capital A/c	36,000	12,000
To Balance c/d	6,41,500	2,98,500	By B’ salary A/c		60,000
			By P and L Appropriation A/c	67,500	67,500
	7,03,500	3,39,500		7,03,500	3,39,500