Q 16. Bhanu and Partap are partners sharing profits equally. Their fixed capitals as on 1st April, 2017 are Rs 8,00,000 and Rs 10,00,000 respectively. Their drawings during the year were Rs 50,000 and Rs 1,00,000 respectively. Interest on Capital is a charge and is to allowed @ 10% p.a. and interest on drawings is to be charged @ 15% p.a. Profit for the year ended 31st March, 2018 was Rs 1,20,000.
Prepare Profit and Loss Appropriation Account.
Dear Student
Note:
1. As the time period of Drawings is not given, it has been given Interest on drawings has been calculated for an average period of 6 months.
2. Since Interest on Capital is a charge against profit, it shall be debited to profit and loss account instead of Appropriation account.
Regards
| Profit and Loss Appropriation A/c | |||||||
| Date | Particulars | Amount | Date | Particulars | Amount | ||
| (Rs) | (Rs) | ||||||
| Net Loss (i.e After charging interest on capital) | 60,000 | ||||||
| (Interest on Capital - Total Profit = 1,80,000 - 1,20,000) | Interest on Drawings | ||||||
| Bhanu | 3,750 | ||||||
| Pratap | 7,500 | 11,250 | |||||
| Loss Transferred (1:1) : | |||||||
| Bhanu | 24,375 | ||||||
| Pratap | 24,375 | 48,750 | |||||
| 60,000 | 60,000 | ||||||
Note:
1. As the time period of Drawings is not given, it has been given Interest on drawings has been calculated for an average period of 6 months.
2. Since Interest on Capital is a charge against profit, it shall be debited to profit and loss account instead of Appropriation account.
Regards