Advertisement Remove all ads

Prepare Firm’S Profit and Loss Appropriation Account. - Accountancy

Ledger

The partnership agreement between Maneesh and Girish provides that:
(i)    Profits will be shared equally;
(ii)   Maneesh will be allowed a salary of Rs 400 p.m;
(iii)  Girish who manages the sales department will be allowed a commission equal to 10% of the net profits, after allowing Maneesh’s salary;
(iv)  7% interest will be allowed on partner’s fixed capital;
(v)   5% interest will be charged on partner’s annual drawings;
(vi)  The fixed capitals of Maneesh and Girish are Rs 1,00,000 and Rs 80,000, respectively. Their annual drawings were Rs 16,000 and 14,000, respectively. The net profit for the year ending March 31, 2015 amounted to Rs 40,000;
Prepare firm’s Profit and Loss Appropriation Account.

Advertisement Remove all ads

Solution

Profit and Loss Appropriation Account

Dr.

 

 

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Partner’s Salary

 

 

Profit and Loss

40,000

Maneesh

 

4,800

Interest on Drawings

 

 

 

 

 

Maneesh

800

 

Partner’s commission

 

 

Girish

700

1,500

Girish {(40,000 – 4,800) × (10/100)}

3,520

 

 

 

Interest on Capital :

 

 

 

 

Mannesh

7,000

 

 

 

 

Girish

5,600

12,600

 

 

 

Profit transferred to :

 

 

 

 

Maneesh’s Current

10,290

 

 

 

 

Girish’s Current

10,290

20,580

 

 

 

 

41,500

 

 

41,500

  Is there an error in this question or solution?
Advertisement Remove all ads

APPEARS IN

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 1
Chapter 2 Accounting for Partnership Firms-Fundamentals
Exercise | Q 7 | Page 100
Advertisement Remove all ads
Advertisement Remove all ads
Share
Notifications

View all notifications


      Forgot password?
View in app×