Sajal and Kajal are partners sharing profits and losses in the ratio of 2 : 1. On 1st April, 2017 their Capitals were: Sajal ₹ 50,000 and Kajal ₹ 40,000. Prepare Profit and Loss Appropriation Account and the Partners Capital Accounts at the end of the year after considering the following items: (a) Interest on Capital is to be allowed @ 5% p.a. (b) Interest on the loan advanced by Kajal for the whole year, the amount of loan being ₹ 30,000. (c) Interest on partners drawings @ 6% p.a. Drawings: Sajal ₹ 10,000 and Kajal ₹ 8,000. (d) 10% of the divisible profit is to be transferred to Reserve. The net profit for the year ended 31st March, 2018 ₹ 68,460. Note: Net profit means net profit after debit of interest on loan by the partner.

Sajal and Kajal are partners sharing profits and losses in the ratio o

1.	Sajal and Kajal are partners sharing profits and losses in the ratio of 2 : 1. On 1st April, 2017 their Capitals were: Sajal ₹ 50,000 and Kajal ₹ 40,000. Prepare Profit and Loss Appropriation Account and the Partners Capital Accounts at the end of the year after considering the following items: (a) Interest on Capital is to be allowed @ 5% p.a. (b) Interest on the loan advanced by Kajal for the whole year, the amount of loan being ₹ 30,000. (c) Interest on partners drawings @ 6% p.a. Drawings: Sajal ₹ 10,000 and Kajal ₹ 8,000. (d) 10% of the divisible profit is to be transferred to Reserve. The net profit for the year ended 31st March, 2018 ₹ 68,460. Note: Net profit means net profit after debit of interest on loan by the partner.
Answer» Notes:1. Calculation of Interest on Capital Interest on Sajal's Capital = Interest on Kajal's Capita = 2. Calculation of Interest on Drawings Interest on Sajal's Drawings Interest on Kajal's Drawings = 3. Calculation of Amount to be TRANSFERRED to RESERVE Amount for Reserve =10 % of DIVISIBLE PROFIT Divisible Profit = Profit + Interest on Drawings - Interest on Capital Rs .68,460+Rs.540-Rs .4,500 = Rs .64,500Amount of Reserve = = 6,4504. Calculation of Profit Share of each Partner Profit available for Distribution =68,460 + 540 - 4,500-6,450$= Rs.58,050Profit Sharing RATIO = 2 :1

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