X, Y and Z are in partnership with capital of Rs. 1,20,000 (credit), Rs. 1,00,000 (credit)
and Rs. 8,000 (Debit) respectively on 1st April, 2017. Their partnership deed provides for the
following:
(a) 7.5% of Net Profit to be transferred to General Reserve.
(b) Partners are to be only allowed interest on capital @ 5% p.a. and are to be charged
interest on drawing @ 6% p.a.
(c) Z is entitled to a salary of Rs. 7,000.
(d) X is entitled to a remuneration of 10% of the net profit before making any appropriation.
(e) Y is also entitled to a commission of 8% of the net profit before charging Interest on
Drawings but after making all appropriations.
During the year, X withdrew Rs. 1,000 at the beginning of every month, Y Rs. 1,000 during
the month and Z Rs. 1,000 at the end of every month. On 1st October 2017, Z granted a loan
of Rs. 6,00,000.
The Manager is entitled to a salary of Rs. 1,000 p.m. and a commission of 10% of net profits
after charging his salary and commission.
The net profit of the firm for the year ended on 31st March, 2018 before providing for any of
the above adjustments was Rs. 1,62,000. Prepare P/L appropriation A/c
Solution :-
Profit and Loss A/c
Profit And Loss Appropriation A/c
Working Notes :-
1) Calculation of Interest on Drawings of Partners :-
X = 12,000 x 6/100 x 6.5/12 = 390
Y = 12,000 x 6/100 x 6/12 = 360
Z = 12,000 x 6/100 x 5.5/12 = 330
Profit and Loss A/c
| Particulars | Amount | Particulars | Amount |
| To Interest on Loan A/c [6,00,000 x6/100 x 6/12] |
18,000 |
By Profit A/c | 1,62,000 |
| To Manager's Salary A/c [1,000 x 12] |
12,000 |
||
| To Manager's Commission A/c [10/110 x 1,32,000] |
12,000 |
||
| To Net Profit A/c | 1,20,000 | ||
| 1,62,000 | 1,62,000 |
Profit And Loss Appropriation A/c
| Particulars | Amount | Particulars | Amount |
| To Reserve A/c [7.5/100 x 1,20,000] |
9,000 |
By Net Profit A/c | 1,20,000 |
| To Interest on Capital A/c : X's Capital A/c : 6,000 Y's Capital A/c : 5,000 |
11,000 |
By Interest on Drawings A/c: X's Capital A/c : 390 Y's Capital A/c : 360 Z's Capital A/c : 330 |
1,080 |
| To Salary A/c (Z) | 7,000 | ||
| To Remuneration A/c (X) [1,20,000 x 10/100] |
12,000 |
||
| To Commission A/c (Y) [81,600 x 8/108] |
6,044 |
||
| To Profit transferred to: X's Capital A/c : 25,345 Y's Capital A/c : 25,345 Z's Capital A/c : 25,346 (In 1:1:1) |
76,036 |
||
| 1,21,080 | 1,21,080 |
Working Notes :-
1) Calculation of Interest on Drawings of Partners :-
X = 12,000 x 6/100 x 6.5/12 = 390
Y = 12,000 x 6/100 x 6/12 = 360
Z = 12,000 x 6/100 x 5.5/12 = 330