Black and white are partners with capital of rs 30000 and rs 20000. profits for the year ended 31st march 2011 amounted to rs. 27100. it is agreed that 5 % interest on capital as such shall be allowed . there is no agreement regarding sharing of profits or partnership salary. black is a whole time partner whereas white does not attend business regularly . black claims rs. 600 salary per month and 60% of balance profits. white advanced rs.10000 as loan and he now claims 10% interest.

State how will you settle the accounts.

( interest on capital @ 5% = black - 1500, white= 1000

interst on loan @ 6 % = white - 600

Residue of profit equally = black - 12000, white - 12000 )

Profit and Loss Appropriation Account

for the year ended March 31, 2011

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital A/c:

Black

White

 

1,500

1,000

 

 

2,500

Profit and Loss A/c

(Net Profit)

27,100

Interest on White’s Loan

 

600

 

 

Profit transferred to:

Black’s Capital

White’s Capital

 

12,000

12,000

 

 

24,000

 

 

 

27,100

 

27,100

 

 

 

 

* As the partnership deed is silent regarding the distribution of profits, so profits should be distributed equally between the partners.

* Also, as the partnership deed is silent regarding the salary, so no salary should be given to any partner.

 

  • 2

interest on capital will be allowed to both the partners @5% as per the agreement. interest on loan will be @6%. No salary would be allowed to Black and profit will shared equally by the partners.

  • -5

hey..can you tell me the complete method to do this ?

  • -1
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