InterviewSolution
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InterviewSolution
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A, B and C are part neers in a from sharing profit and losses 8:7:3. Their capital where ₹ 60,000 45,000 and 35,000 respectively. Band C get annual Salary 6,000 and 5,000 respecticely. Interest on Capital is allowed @ 10% p.a. The net profit during the year were ₹ 150000. prepare profit and loss appropriation. CORRECT ANSWER WILL BE BRAINLIST ⭐ |
| Answer» ATA:A, B and C are partners in a firm sharing profits and losses in the ratio 8:7:3.Their CAPITALS are Rs 60,000, Rs 45,000 and Rs 35,000 respectively.B and C are entitled to an annual salary of Rs 6,000 and Rs 5,000 respectively.Interest on capital is to be charged at 10% p.a.The profit for the year was Rs 1,50,000.Objective: To prepare a Profit & Loss Appropriation A/c.Answer:Calculation of interests on capitals:Interest on capital = (Capital × Rate) ÷ 100For A:Interest on capital = (Rs 60,000 × 10) ÷ 100 = Rs 6,000For B:Interest on capital = (Rs 45,000 × 10) ÷ 100 = Rs 4,500For C:Interest on capital = (Rs 35,000 × 10) ÷ 100 = Rs 3,500Interests on capitals will be recorded on the DEBIT side of the appropriation ACCOUNT.Salaries will be recorded on the debit side of the appropriation account.Calculation of profit/loss:To determine profit/loss, observe the debit and credit sides of the account. If the balancing figure appears on the debit side, it is profit. Else, loss.Credit = Rs 1,50,000Debit = Rs 25,000Balancing figure = Rs 1,50,000 - Rs 25,000 = Rs 1,25,000 [Dr.]Calculation of profit distribution:Since they share their profits and losses in the ratio 8:7:3, it will be distributed accordingly.For A:Profit share = Rs 1,25,000 × 8/18 = Rs 55,556 [approx.]For B:Profit share = Rs 1,25,000 × 7/18 = Rs 48,611 [approx.]For C:Profit share = Rs 1,25,000 × 3/18 = Rs 20,833 [approx.]The Profit & Loss Appropriation account has been attached below. | |