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Question -

Abhay, Siddharth and Kusum are partners in a firm, sharing profits in the ratio of 5:3:2. Kusum is guaranteed a minimum amount of ₹ 10,000 as per share in the profits. Any deficiency arising on that account shall be met by Siddharth. Profits for the years ending March 31, 2016 and 2017 are ₹ 40,000 and 60,000 respectively. Prepare Profit and Loss Appropriation Account.



Answer -

Profit and Loss Appropriation Account as on March 31, 2016

Dr.

 

 

 

 

Cr.

Particulars

Amount

Particulars

Amount

Profit transferred to

 

 

Profit and Loss

 

40,000

Abhay’s Capital

 

20,000

 

 

 

 

 

 

 

 

 

 

Siddharth’s Capital

12,000

 

 

 

 

Less: Guarantee to Kusum’s

(2,000)

10,000

 

 

 

 

 

 

 

 

 

Kusum’s Capital

8,000

 

 

 

 

Add: Deficiency received from Siddharth

2,000

10,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40,000

 

 

40,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit and Loss Appropriation Account as on March 31, 2017

Dr.

 

 

 

Cr.

Particulars

Amount

Particulars

Amount

Profit transferred to

 

Profit and Loss

60,000

Abhay’s Capital

30,000

 

 

Siddharth’s Capital

18,000

 

 

Kusum’s Capital

12,000

 

 

 

 

 

 

 

60,000

 

60,000

 

 

 

 

 

 

 

 

 

 

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