Amitabh and Babul are partners sharing profits in the ratio of 3:2 with capitals of Rs 50,000 and Rs 30,000 - Accountancy - Accounting for Partnership Basic Concepts

Question

Amitabh and Babul are partners sharing profits in the ratio of
3:2 with capitals of Rs 50,000 and Rs 30,000 respectively Interest
on capital is agreed @ 6% p a Babul is to be allowed an annual
salary of Rs 2,500 During the year 2005-06,the profits prior to the
calculation of interest on capital but after charging Babul's
salary amounted to Rs 12,500 A provision of 5% of the profit is to
be made in respect of commission to the manager
prepare profit and loss appropriation account showing the
distribution of profit and the partners capital accounts for the
year ending march 31,2006

Manisha Arora · Accepted Answer

Profit and Loss
Appropriation Account
for the year ended

Dr

Cr

Particulars
Amount
Rs
Particulars
Amount
Rs

Interest on Capital A/c:

Profit and Loss A/c before Babul’s
Salary (12,500+2,500)
15,000

Amitabh
3,000

Babul
1,800
4,800

Salary to Babul
2,500

Provision for Manger’s
Commission
(15,000×5%)
750

Profit transferred to:

Amitabh’s Capital A/c
4,170

Babul’s Capital A/c
2,780
6,950

15,000

Partners’
Capital Accounts

Dr

Cr

Particulars
Amitabh
Babul
Particulars
Amitabh
Babul

Balance b/d
50,000
30,000

Interest on Capital A/c
3,000
1,800

Salary A/c

2,500

Balance c/d
57,170
37,080
P/L Appropriation A/c
4,170
2,780

57,170
37,080

Profit and Loss Appropriation Account for the year ended
Dr.					Cr.
Particulars			Amount Rs	Particulars	Amount Rs
Interest on Capital A/c:				Profit and Loss A/c before Babul’s Salary (12,500+2,500)	15,000
Amitabh		3,000
Babul		1,800	4,800
Salary to Babul			2,500
Provision for Manger’s Commission (15,000×5%)			750
Profit transferred to:
Amitabh’s Capital A/c	4,170
Babul’s Capital A/c	2,780		6,950
			15,000		15,000

Partners’ Capital Accounts
Dr.						Cr.
Particulars	Amitabh	Babul	Particulars	Amitabh	Babul
			Balance b/d	50,000	30,000
			Interest on Capital A/c	3,000	1,800
			Salary A/c		2,500
Balance c/d	57,170	37,080	P/L Appropriation A/c	4,170	2,780
	57,170	37,080		57,170	37,080