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Question
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Rudra, Dev and Shiv were partners in a firm sharing profits in the ratio of 5 : 3 : 2. Their fixed capitals were ₹ 6,00,000, ₹ 4,00,000 and ₹ 2,00,000 respectively. Besides his capital Shiv had given a loan of ₹ 75,000 to the firm. Their partnership deed provided for the following:
During the year Rudra withdrew ₹ 50,000 at the end of each quarter; Dev withdrew ₹ 50,000 in the beginning of each half year and Shiv withdrew ₹ 70,000 at the end of each half year. The profit of the firm for the year ended 31-3-2022 before allowing interest on Shiv's loan was ₹ 7,06,750. |
How much amount of net profit will be transferred to Profit and Loss Appropriation A/c?
Options
₹ 7,06,750
₹ 7,02,250
₹ 7,00,000
₹ 7,13,000
Solution
₹ 7,00,000
Explanation:
Interest on Shiv's loan is to be considered a change against profits and thus to be shown in profit and loss A/c.
Interest on Shiv's Loan `( 75,000 xx 9/100)` = ₹ 6,750
Profit to be transferred to Profit and Loss Appropriation A/c = ₹ 7,06,750 - 6,750 = ₹ 7,00,000
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Balance Sheet as at March 31, 2017 |
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Amount |
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Amount |
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Liabilities |
Rs |
Assets |
Rs |
|
Neelkant’s Capital |
10,00,000 |
Sundry Assets |
30,00,000 |
|
Mahadev’s Capital |
10,00,000 |
|
|
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Neelkant’s Current Account |
1,00,000 |
|
|
|
Mahadev’s Current Account |
1,00,000 |
|
|
|
Profit and Loss Apprpriation |
|
|
|
|
(March 2017) |
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|
|
|
|
30,00,000 |
|
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