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Question
Rakhi and Shikha are partners in a firm, with capitals of Rs 2,00,000 and Rs 3,00,000 respectively. The profit of the firm, for the year ended 2016-17 is Rs 23,200. As per the Partnership agreement, they share the profit in their capital ratio, after allowing a salary of Rs 5,000 per month to Shikha and interest on Partner’s capital at the rate of 10% p.a. During the year Rakhi withdrew Rs 7,000 and Shikha Rs 10,000 for their personal use. You are required to prepare Profit and Loss Appropriation Account and Partner’s Capital Accounts.
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Solution
If interest on capital and Partners’ salaries will be provided even if firm involves in loss.
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Profit and Loss Appropriation Account |
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Dr. |
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Cr. |
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Particulars |
Amount Rs |
Particulars |
Amount Rs |
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Partner’s Salaries : |
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Profit and Loss |
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23,200 |
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Shikha |
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60,000 |
Loss transferred to : |
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Rakhi Capital |
34,720 |
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Interest on Capital : |
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Shikha’s Capital |
52,080 |
86,800 |
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Rakhi |
20,000 |
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Shikha |
30,000 |
50,000 |
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1,10,000 |
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1,10,000 |
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Partners’ Capital Account |
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Dr. |
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Cr. |
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Particulars |
Rakhi |
Shikha |
Particulars |
Rakhi |
Shikha |
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Drawings |
7,000 |
10,000 |
Balance b/d |
2,00,000 |
3,00,000 |
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Profit & Loss Appropriation |
34,720 |
52,080 |
Partner’s Salaries |
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60,000 |
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Balance c/d |
1,78,280 |
3,27,920 |
Interest on Capital |
20,000 |
30,000 |
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2,20,000 |
3,90,000 |
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2,20,000 |
3,90,000 |
If interest on capital and salaries will be provided out of profit
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Profit and Loss Appropriation Account |
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Dr. |
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Cr. |
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Particulars |
Amount (Rs.) |
Particulars |
Amount (Rs.) |
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Partner’s Salaries |
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Profit and Loss |
23,200 |
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Shikha {23,200 × (6/11)} |
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12,655 |
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Interest on Capital |
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Rakhi {23,200 × (2/11)} |
4,218 |
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Shikha {23,200 × (3/11)} |
6,327 |
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23,200 |
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23,200 |
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If profit is less than the sum of distributable items, distribution shall be in proportion of items for distribution.
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Partners Salaries |
Ratio |
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Shikhar (Rs 60,000) |
6 |
23,200 × (6/11) |
12,655 |
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Interest on Capital |
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Rakhi (Rs 20,000) |
2 |
23,200 × (2/11) |
4,218 |
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Shikhar (Rs 30,000) |
3 |
23,200 × (3/11) |
6,327 |
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11 |
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23,200 |
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Partners’ Capital Account |
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Dr. |
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Cr. |
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Particulars |
Rakhi |
Shikha |
Particulars |
Rakhi |
Shikha |
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Drawings |
7,000 |
10,000 |
Balance b/d |
2,00,000 |
3,00,000 |
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Partner’s Salaries |
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12,655 |
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Balance c/d |
1,97,218 |
3,08,972 |
Interest on Capital |
4,218 |
6,327 |
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2,04,218 |
3,18,972 |
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2,04,218 |
3,18,972 |
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Rakesh |
Month |
Rs |
|
|
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|
|
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|
|
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|
|
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|
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|
|
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|
|
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|
Rohan |
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|
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|
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Following is their Profit & Loss Appropriation Account.
| Particulars | (₹) | Particulars | (₹) |
| To Interest on Capital | By Profit & loss account (After manager’s commission) | ___(2)___ | |
| Richa | ______ | ||
| Anmol | ______ | ||
| To Anmol’s Salary a/c | 12,500 | ||
| To Profit transferred to: | |||
| Richa’s Capital A/C (1) | ___(1)___ | ||
| Anmol’s Capital A/c | ______ | ||
| ______ | ______ |
The amount to be reflected in blank (2) will be:
