Skip to content
Solution
Please Share This
Share this content
Read more articles
X and Y entered into partnership on 1st April, 2017. Their capitals as on 1st April, 2018 were Rs. 2,00,000 and Rs. 1,50,000 respectively. On 1st October, 2018, X gave Rs. 50,000 as loan to the firm. As per the provisions of the partnership Deed: (i) 20% of Profits before charging interest on Drawings but after making appropriations to be transferred to General Reserve. (ii) Interest on capital at 12% p.a. and Interest on Drawings @ 10% p.a. (iii) X to get monthly salary of Rs. 5,000 and Y to get salary of Rs. 22,500 per quarter. (iv) X is entitled to a commission of 5% on sales. Sales for the year were Rs. 3,50,000. (v) Profit to be shared in the ratio of their capitals up to Rs. 1,75,000 and balance equally. Profit for the year ended 31st March, 2019 before allowing or charging interest was Rs. 4,61,000. The drawings of X and Y were Rs. 1,00,000 and Rs. 1,25,000 respectively. Pass the necessary Journal entries relating to appropriation out of profit. Prepare Profit and Loss Appropriation Account and the Partners’ Capital Accounts.
You Might Also Like
