Question 4 Chapter 2 of Class 12 Part – 1
4. A and B entered into a partnership on 1st April, 2017. They contributed Rs. 1,00,000 and Rs. 2,00,000 respectively and agreed that interest on capital should be allowed at 10% p.a. A must receive a salary of Rs. 20,000 p.a. and B Rs. 30,000 p.a. The profits for the year amounted to Rs. 1,20,000 which are to be shared equally amongst the partners. Interest on drawings amounted to Rs. 3,000 and Rs. 4,500 for A and B respectively.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018:
The solution of Question 4 Chapter 2 of Class 12 Part – 1: –
Rectification of mistakes:
(i) Interest on B’s Loan is to be provided @ 6% pa. and not @ 4% p.a.
(ii) No salary is to be given to partner A for working as manager in the partnership deed
(iii) Cut Profit will be shared by partners in equal ratio.
(iv) Interest on drawings will be charged for an average period of 6 months. Revised Profit and Loss Appropriation Account is given below:
Profit and Loss Appreciation Account
For the year ended 31st March, 2018
|To Interest on Capital A/c:||By Profit and Loss A/c||1,20,000|
|A||10,000||By Interest on Drawings|
|To Partner’s Salary A/c||B||4,500||7,500|
|To Profit transferred to Capital A/c’s|
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