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Question
Ram, Raj and George are partners sharing profits in the ratio 5 : 3 : 2. According to the partnership agreement George is to get a minimum amount of Rs 10,000 as his share of profits every year. The net profit for the year 2013 amounted to Rs 40,000. Prepare the Profit and Loss Appropriation Account.
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Solution
Profit and Loss Appropriation Account
Dr. Cr.
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Particulars |
Amount Rs |
Particulars |
Amount Rs |
||
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Profit transferred to |
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Profit and Loss |
40,000 |
||
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Ram’s Capital (20,000 – 1,250) |
18,750 |
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|
||
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Raj’s Capital (12,000 – 750) |
11,250 |
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|
||
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George’s Capital (8,000 + 1,250 + 750) |
10,000 |
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||
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40,000 |
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40,000 |
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|
|
Sukesh (Rs) |
Verma* (Rs) |
|
Capital Accounts |
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|
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|
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|
Rs |
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|
Balance Sheet as at March 31, 2017 |
|||
|
|
Amount |
|
Amount |
|
Liabilities |
Rs |
Assets |
Rs |
|
Neelkant’s Capital |
10,00,000 |
Sundry Assets |
30,00,000 |
|
Mahadev’s Capital |
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|
|
|
Neelkant’s Current Account |
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|
|
|
Mahadev’s Current Account |
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|
Profit and Loss Apprpriation |
|
|
|
|
(March 2017) |
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|
|
|
|
30,00,000 |
|
30,00,000 |
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|
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What will the amount of interest on drawings of the partners?
