Please bata doRam and Rahim start business with capital of ` 50,000 an

1.	Please bata doRam and Rahim start business with capital of ` 50,000 and 130,000 on 1 st January, 2016. Rahim is entitled to a salary of ` 400per month. Interest is allowed on capitals and is charged on drawings at 6% per annum. Profits are to be distributed equally after the above noted adjustments. During the year, Ram withdrew 18,000 and Rahim withdrew 110,000. The profit for the year before allowing for the terms of the Partnership Deed came to 130,000. Assuming the capitals to be fixed, prepare the Profit and Loss Appropriation Account
Answer» Answer: CALCULATION of CAPITAL balance in the beginning: Particulars RAM Mohan Capitals at the end of the year 24000 18000 Less: Profit already credited (8000) (8000) Add: Drawings already debited 4000 6000 Capital at the beginning of the year 20000 16000 NOTE: Interest on capital is always calculated on the opening balance of the partner's capital. Ram's interest on capital= 20000 * 5/100 = 1000 Mohan's interest on capital= 16000 * 5/100 = 800

Please bata doRam and Rahim start business with capital of ` 50,000 and 130,000 on 1 st January, 2016. Rahim is entitled to a salary of ` 400per month. Interest is allowed on capitals and is charged on drawings at 6% per annum. Profits are to be distributed equally after the above noted adjustments. During the year, Ram withdrew 18,000 and Rahim withdrew 110,000. The profit for the year before allowing for the terms of the Partnership Deed came to 130,000. Assuming the capitals to be fixed, prepare the Profit and Loss Appropriation Account

Answer»

Answer:

CALCULATION of CAPITAL balance in the beginning:

Particulars RAM Mohan

Capitals at the end of the year 24000 18000

Less: Profit already credited (8000) (8000)

Add: Drawings already debited 4000 6000

Capital at the beginning of the year 20000 16000

NOTE: Interest on capital is always calculated on the opening balance of the partner's capital.

Ram's interest on capital= 20000 * 5/100

= 1000

Mohan's interest on capital= 16000 * 5/100

= 800