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Question
Simmi and Sonu are partners in a firm, sharing profits and losses in the ratio of 3:1. The profit and loss account of the firm for the year ending March 31, 2020 shows a net profit of Rs 1,50,000. Prepare the Profit and Loss Appropriation Account by taking into consideration the following information:
- Partners capital on April 1, 2019;
Simmi, Rs 30,000; Sonu, Rs 60,000; - Current accounts balances on April 1, 2016,
Simmi, Rs 30,000 (cr.); Sonu, Rs 15,000 (cr.); - Partners drawings during the year amounted to
Simmi, Rs 20,000; Sonu, Rs 15,000; - Interest on capital was allowed @ 5% p.a.;
- Interest on drawing was to be charged @ 6% p.a. at an average of six months;
- Partners’ salaries: Simmi Rs 12,000 and Sonu Rs 9,000. Also show the partners’ current accounts.
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Solution
| Dr. | Profit and Loss Appropriation A/c for the year ending 31st March, 2020 |
Cr. | |||
| Particulars | Amount (₹) | Amount (₹) | Particulars | Amount (₹) | Amount (₹) |
| To Simmi’s Salary | 12,000 | By Net Profit as per P&L A/c | 1,50,000 | ||
| To Sonu’s Salary | 9,000 | By Interest on Drawings: | |||
| To Interest on Capital: | -Simmi | 600 | 1050 | ||
| -Simmi | 1,500 | 4,500 | -Sonu | 450 | |
| -Sonu | 3,000 | ||||
| To Profit transferred to Current A/cs: | |||||
| -Simmi (3/4) | 94,162.50 | 1,25,550 | |||
| -Sonu (1/4) | 31,387.50 | ||||
| 1,50,050 | 1,50,050 | ||||
| Dr. | Partners’ Current Accounts | Cr. | |||
| Particulars | Simmi (₹) | Sonu (₹) | Particulars | Simmi (₹) | Sonu (₹) |
| Drawings | 20,000 | 15,000 | Balance b/d | 30,000 | 15,000 |
| Balance c/d | 1,18,262.50 | 43,837.50 | Interest on Drawings | 600 | 450 |
| Salary | 12,000 | 9,000 | |||
| Interest on Capital | 1,500 | 3,000 | |||
| Share of Profit | 94,162.50 | 31,387.50 | |||
| Total | 1,38,262.50 | 58,837.50 | Total | 1,38,262.50 | 58,837.50 |
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