Chintoo and Montoo are partners without any agreement on 1st April, 20

1.	Chintoo and Montoo are partners without any agreement on 1st April, 2017 andthey invested Capital 20,000 and 10,000 respectively. On 30th Nov., 2017,Chintoo advances to the firm 4,000 on loan. The Profit and Loss Account forthe year 2017-18 shows profit of 4,000, but the partners are not agreed upon thequestion of interest and division of profit.Prepare Profit & Loss Appropriation Account.
Answer» Answer: Profit and loss Appropriation A/c Dr. 4,25,000 To A's capital A/c 2,12,500 To B's capital A/c 2,12,500 (Being profit distributed equally) PARTNERS CAPITAL ACCOUNTS Particulars A B Particulars A B To bal c/d 7,12,500 5,12,500 By bank a/c 5,00,000 3,00,000 By profit and loss App A/c 2,12,500 2,12,500 Total 7,12,500 5,12,500 Total 7,12,500 5,12,500 A's LOAN Account Particulars Amount Particulars Amount To bal c/d 2,05,000 By bank A/c 2,00,000 By interest on A's loan 5000 Total 2,05,000 Total 2,05,000 Calculation of Interest on Loan *Interest on A's loan = 2,00,0006%5/12=5000* Interest on A's Loan A/c Dr. 5000 To A's loan A/c 5000 (Being interest on loan PAID) Profit and loss A/c Dr. 5000 To Interest on A's loan A/c 5000 (Being interest transferred to p&l A/c) Explanation:

Chintoo and Montoo are partners without any agreement on 1st April, 2017 andthey invested Capital 20,000 and 10,000 respectively. On 30th Nov., 2017,Chintoo advances to the firm 4,000 on loan. The Profit and Loss Account forthe year 2017-18 shows profit of 4,000, but the partners are not agreed upon thequestion of interest and division of profit.Prepare Profit & Loss Appropriation Account.

Answer»

Answer: Profit and loss Appropriation A/c Dr. 4,25,000

To A's capital A/c 2,12,500

To B's capital A/c 2,12,500

(Being profit distributed equally)

PARTNERS CAPITAL ACCOUNTS

Particulars A B Particulars A B

To bal c/d 7,12,500 5,12,500 By bank a/c 5,00,000 3,00,000

By profit and loss App A/c 2,12,500 2,12,500

Total 7,12,500 5,12,500 Total 7,12,500 5,12,500

A's LOAN Account

Particulars Amount Particulars Amount

To bal c/d 2,05,000 By bank A/c 2,00,000

By interest on A's loan 5000

Total 2,05,000 Total 2,05,000

Calculation of Interest on Loan

Interest on A's loan = 2,00,000*6%*5/12=5000

Interest on A's Loan A/c Dr. 5000

To A's loan A/c 5000

(Being interest on loan PAID)

Profit and loss A/c Dr. 5000

To Interest on A's loan A/c 5000

(Being interest transferred to p&l A/c)

Explanation: