Question

A and B started a business on 1st April 2018 the capital contribution to rupees 200000 and 150000 the partnership deed provided:

one ,interest on capital at 10%p a
2.A to get salary of ₹24000 p.a and B ₹3000per month ​
3. Profit are tobe sharedin the ratioof 3:2
Help me with point no.2

Answer 1

DEBIT SIDE $220,700

CREDIT SIDE $220,700

Step-by-step explanation:

Preparation of Profit and Loss Appropriation Account.

PROFIT AND LOSS APPROPRIATE ACCOUNT

Particular DEBIT SIDE

Interest Capital

A (10/100*200,000) 20,000

B (10/100*150,000)15,000

=35,000

Salary

A (2,000*12) 24,000

B (3,000*12) 36,000

= $60,000

Profit transferred

A Capital (125,700*3/5) 75,420

B Capital (125,700*2/5) 50,280

=125,700

TOTAL DEBIT SIDE $220,700

(35,000+60,000+125,700)

PROFIT AND LOSS APPROPRIATE ACCOUNT

Particular CREDIT SIDE

Profit and loss Account (Net profit) 216,000

Interest on drawing

A 2,200

B 2,500

TOTAL CREDIT SIDE $220,700

(216,000+2,200+2,500)

Calculation for the amount that was used to calculate the Profit transferred for both A and B

Profit = 216,000+2,200+2,500 - 35,000-60,000

Profit= 125,700

Therefore Profit and Loss Appropriation Account balance will be:

DEBIT SIDE $220,700

CREDIT SIDE $220,700