Solution
Prem and Manoj are partners in a firm sharing profits in the ratio of 3: 2. The Partnership Deed provided that Prem was to be paid salary of Rs. 2,500 per month and Manoj was to ger a commission of Rs. 10,000 per year. Interest on capital was to be allowed @ 5% p.a. and interest on drawings was to be charged @ 6% p.a. Interest on Prem’s drawings was Rs. 1,250 and on Manoj’s drawings was Rs. 425. Interest on Capitals of the partners were Rs. 10,000 and Rs. 7,500 respectively. The firm earned a profit of Rs. 90,575 for the year ended 31st March, 2018. Prepare Profit and Loss Appropriation Account of the firm.