Question

Rohit, Mohit and Sohit are partners sharing profit and losses in the ratio of 2:1:1. Their capitals on 31st march 2017 are 530000, 640000 and 790000. Their drawings were rohit = 70000, mohit = 60000 and sohit = 10000. Partnership deed provided to charge interest on capital @10% pa and interest on drawing @5%. Prepare profit and loss appropriation account.

Answer 1

Profit and Loss appropriation account

Interest on drawing =

Rohit = 70000 x 5/100 = 3500

Mohit = 60000 x 5/100 = 3000

Sohit = 10000 x 5/100 = 500

Note- months are not taken for interest on drawings as per annum is not written with the percentage.

For interest on capital calculation of opening capital

700000 x 10/100 = 70000

800000 x 10/100 = 80000