Satnam and Qureshi after doing their MBA decided to start a partnership firm to manufacture 151 marked electronic goods for economically weaker section of the society. Satnam also expressed his willingness to admit Juliee as partner without capital who is specially abled but a very creative and intelligent friend of him. Qureshi agreed to this. They formed a partnership on 1st April 2012 on the following terms :
i. Satnam will contribute Rs.4,00,000 and Qureshi will contribute Rs.2,00,000 as capitals.
ii. Satnam, Qureshi and Juliee will share profits in the ratio of 2:2:1.
iii. Interest on capital will be allowed @ 6% p.a. Due to shortage of capital Satnam contributed Rs.50,000 on 30th September, 2012 and Qureshi contributed Rs.20,000 on 1st January, 2013 as additional capitals. The profit of the firm for the year ended 31st March, 2013 was Rs.3,37,800.
a. Identify any two values which the firm wants to communicate to the society.
Prepare Profit & Loss Appropriation Account for the year ending 31st March 2013.
(a) Value involved in the above scenario:
- Social Welfare
- Fulfilling Duties
(b) Profit and Loss Appropriation Account
For the year ended April 01, 2012
To Interest on Capital A/c:
To Profit transferred to:
Satnam’s capital A/c 1,20,000
Qureshi’s Capital A/c 1,20,000
Juliee’s Capital A/c 60,000
By Profit and Loss A/c
Calculation of Interest on Capital:
a) Interest on Satnam’s capital:
On Initial capital of Rs 4,00,000
`4,00,000 xx 6%` = 24,000
On additional capital of Rs 50,000
`50,000 xx 6% xx 6/12` = 1500
Total interest on Satnam’s capital = 24000 + 1500 = Rs 25,500.
b) Interest on Qureshi’s Capital:
On initial capital of Rs 2,00,000
`2,00,000 xx 6%` = Rs 12,000
On additional capital of Rs 20,000
`20,000 xx 6% xx 3/12` = Rs 300
Total interest on Qureshi’s Capital = 12,300
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- Preparation of Profit and Loss Appropriation Account