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Question
Arun and Arora were partners in a firm sharing profits in the ratio of 5 : 3. Their fixed capitals on 1-4-2010 were: Arun Rs 60,000 and Arora Rs 80,000. They agreed to allow interest on capital @ 12% p.a. And to charge on drawings @ 15% p.a. The profit of the firm for the year ended 31-3 2011 before all above adjustments were Rs 12,600. The drawings made by Arun were Rs 2,000 and by Arora Rs 4,000 during the year. Prepare Profit and Loss Appropriation Account of Arun and Arora. Show your calculations clearly. The interest on capital will be allowed even if the firm incurs loss.
Solution
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Profit and Loss Adjustment Account |
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Dr. |
Cr. |
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Particulars |
Amount Rs |
Particulars |
Amount Rs |
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Interest on Capital: |
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Profit and Loss A/c |
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12,600 |
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Arun |
7,200 |
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(Net Profit) |
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Arora |
9,600 |
16,800 |
Interest on Drawings: |
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Arun |
150 |
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Arora |
300 |
450 |
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Loss transferred to Current Account: |
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Arun |
2,344 |
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Arora |
1,406 |
3,750 |
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16,800 |
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16,800 |
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Notes
Interest on Capital:
Arun=`60,000xx12/100`
=`Rs 7,200`
Arora=`80,000xx12/100`
=`9,600`
Interest on Drawings: As the date of drawing is not mentioned, so interest on drawings will be charged for 6 months.
Arun=`2,000xx15/100xx6/12`
=Rs `150`
Arora=`4,000xx15/100xx6/12`
=Rs `300`
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Amount Rs |
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Balance Sheet of W and R as on 31.3.2016 |
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Liabilities |
Amount (Rs) |
Assets |
Amount (Rs) |
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Sundry Creditors |
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Cash |
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Provision for Bad Debts |
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Outstanding Salary |
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General Reserve |
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40,000 |
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Plant & Machinery |
40,000 |
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Capitals: |
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W |
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R |
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Balance Sheet of P, Q, R and S as on 1.4.2016 |
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Liabilities |
Amount (Rs) |
Assets |
Amount (Rs) |
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Capitals: |
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Fixed Assets |
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P |
2,00,000 |
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Current Assets |
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Q |
3,00,000 |
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R |
4,00,000 |
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S |
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14,00,000 |
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| Sundry Creditor | 2,30,000 | |||
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Workmen |
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18,00,000 |
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Balance Sheet of Mahadev, Sukesh, Menon and Thomas as at 31.3.2016 |
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Liabilities |
Amount (Rs) |
Assets |
Amount (Rs) |
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Capitals: |
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Fixed Assets |
18,00,000 |
|
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Mahadev |
7,00,000 |
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Current Assets |
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Sukesh |
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Menon |
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Thomas |
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Sundry Creditors |
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Workmen Compensation Reserve |
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Balance Sheet of B and C as on 31-3-2011 |
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|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
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|
Capital: |
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Land and Building |
80,000 |
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‘B’ |
60,000 |
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Machinery |
20,000 |
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‘C’ |
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10,000 |
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|
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Debtors |
25,000 |
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Provision for bad debts |
1,000 |
Cash |
16,000 |
||
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Creditors |
|
60,000 |
Profit and Loss Account |
10,000 |
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|
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1,61,000 |
|
1,61,000 |
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Balance Sheet of Sanjay and Sameer as on 31.3.2011 |
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Liabilities |
Amount Rs |
Assets |
Amount Rs |
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Capitals |
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Land and Building |
3,00,000 |
|
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Sanjay: |
2,00,000 |
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Stock |
1,00,000 |
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Sameer: |
3,00,000 |
5,00,000 |
Debtors |
1,50,000 |
|
Creditors |
1,05,000 |
Bank |
1,55,000 |
|
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Workmen compensation Fund |
1,00,000 |
|
|
|
|
|
7,05,000 |
|
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