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P and q partners sharing profits and losses in the ratio of 3:2 with their capitals on 1st Jan ,2015 as 3,00,000 and 100000 respectively. Interest on capital is allowed @ 5%per annum . Q is allowed an annual salary of rs 3000 which he has not withdrawn during 2015, the profit prior to calculation of interest but after charging Q's salary amounted to rs 45,000. Prepare profit and loss appropriation account showing allocation of profits.?
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P and q partners sharing profits and losses in the ratio of 3:2 with t...
Profit and Loss Appropriation Account for the year ended 31st December 2015
Particulars Amount (Rs.)
Profit before Interest and Salary 45,000
Less: Salary to Q 3,000
Net Profit before Interest 42,000
Interest on Capital
P 3,00,000 x 5% 15,000
Q 1,00,000 x 5% 5,000
Total Interest on Capital 20,000
Net Profit after Interest but before Appropriation 22,000
Appropriation of Profit
P's Share (3/5) 13,200
Q's Share (2/5) 8,800
Total 22,000
Explanation:
In this question, P and Q are partners sharing profits and losses in the ratio of 3:2 with their capitals on 1st January 2015 as 3,00,000 and 1,00,000 respectively. Interest on capital is allowed @ 5% per annum. Q is allowed an annual salary of Rs. 3,000 which he has not withdrawn during 2015, the profit prior to calculation of interest but after charging Q's salary amounted to Rs. 45,000.
To prepare the Profit and Loss Appropriation Account, we need to follow the following steps:
Step 1: Calculate the Net Profit before Interest and Salary
The profit before interest and salary amounts to Rs. 45,000.
Step 2: Deduct Q's Salary
Q is allowed an annual salary of Rs. 3,000 which he has not withdrawn during 2015. Therefore, we need to deduct Q's salary from the net profit before interest to arrive at the net profit before interest and salary. The net profit before interest and salary amounts to Rs. 42,000 (45,000 - 3,000).
Step 3: Calculate Interest on Capital
Interest on capital is allowed @ 5% per annum. Therefore, we need to calculate the interest on capital for both P and Q. The interest on capital for P amounts to Rs. 15,000 (3,00,000 x 5%) and for Q amounts to Rs. 5,000 (1,00,000 x 5%). The total interest on capital amounts to Rs. 20,000 (15,000 + 5,000).
Step 4: Calculate Net Profit after Interest but before Appropriation
We need to deduct the interest on capital from the net profit before interest and salary to arrive at the net profit after interest but before appropriation. The net profit after interest but before appropriation amounts to Rs. 22,000 (42,000 - 20,000).
Step 5: Allocate the Profit
We need to allocate the profit according to the profit sharing ratio. The profit sharing ratio between P and Q is 3:2. Therefore, P's share amounts to Rs. 13,200 (22,000 x 3/5) and Q's share amounts to Rs. 8,800 (22,000 x 2/5).
In conclusion, the Profit and Loss Appropriation Account shows that the net profit after interest but before appropriation amounts to Rs. 22,000. Out of this, P's share is Rs. 13,200 and Q's share is Rs. 8,800.
Particulars Amount (Rs.)
Profit before Interest and Salary 45,000
Less: Salary to Q 3,000
Net Profit before Interest 42,000
Interest on Capital
P 3,00,000 x 5% 15,000
Q 1,00,000 x 5% 5,000
Total Interest on Capital 20,000
Net Profit after Interest but before Appropriation 22,000
Appropriation of Profit
P's Share (3/5) 13,200
Q's Share (2/5) 8,800
Total 22,000
Explanation:
In this question, P and Q are partners sharing profits and losses in the ratio of 3:2 with their capitals on 1st January 2015 as 3,00,000 and 1,00,000 respectively. Interest on capital is allowed @ 5% per annum. Q is allowed an annual salary of Rs. 3,000 which he has not withdrawn during 2015, the profit prior to calculation of interest but after charging Q's salary amounted to Rs. 45,000.
To prepare the Profit and Loss Appropriation Account, we need to follow the following steps:
Step 1: Calculate the Net Profit before Interest and Salary
The profit before interest and salary amounts to Rs. 45,000.
Step 2: Deduct Q's Salary
Q is allowed an annual salary of Rs. 3,000 which he has not withdrawn during 2015. Therefore, we need to deduct Q's salary from the net profit before interest to arrive at the net profit before interest and salary. The net profit before interest and salary amounts to Rs. 42,000 (45,000 - 3,000).
Step 3: Calculate Interest on Capital
Interest on capital is allowed @ 5% per annum. Therefore, we need to calculate the interest on capital for both P and Q. The interest on capital for P amounts to Rs. 15,000 (3,00,000 x 5%) and for Q amounts to Rs. 5,000 (1,00,000 x 5%). The total interest on capital amounts to Rs. 20,000 (15,000 + 5,000).
Step 4: Calculate Net Profit after Interest but before Appropriation
We need to deduct the interest on capital from the net profit before interest and salary to arrive at the net profit after interest but before appropriation. The net profit after interest but before appropriation amounts to Rs. 22,000 (42,000 - 20,000).
Step 5: Allocate the Profit
We need to allocate the profit according to the profit sharing ratio. The profit sharing ratio between P and Q is 3:2. Therefore, P's share amounts to Rs. 13,200 (22,000 x 3/5) and Q's share amounts to Rs. 8,800 (22,000 x 2/5).
In conclusion, the Profit and Loss Appropriation Account shows that the net profit after interest but before appropriation amounts to Rs. 22,000. Out of this, P's share is Rs. 13,200 and Q's share is Rs. 8,800.
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P and q partners sharing profits and losses in the ratio of 3:2 with their capitals on 1st Jan ,2015 as 3,00,000 and 100000 respectively. Interest on capital is allowed @ 5%per annum . Q is allowed an annual salary of rs 3000 which he has not withdrawn during 2015, the profit prior to calculation of interest but after charging Q's salary amounted to rs 45,000. Prepare profit and loss appropriation account showing allocation of profits.?
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P and q partners sharing profits and losses in the ratio of 3:2 with their capitals on 1st Jan ,2015 as 3,00,000 and 100000 respectively. Interest on capital is allowed @ 5%per annum . Q is allowed an annual salary of rs 3000 which he has not withdrawn during 2015, the profit prior to calculation of interest but after charging Q's salary amounted to rs 45,000. Prepare profit and loss appropriation account showing allocation of profits.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about P and q partners sharing profits and losses in the ratio of 3:2 with their capitals on 1st Jan ,2015 as 3,00,000 and 100000 respectively. Interest on capital is allowed @ 5%per annum . Q is allowed an annual salary of rs 3000 which he has not withdrawn during 2015, the profit prior to calculation of interest but after charging Q's salary amounted to rs 45,000. Prepare profit and loss appropriation account showing allocation of profits.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for P and q partners sharing profits and losses in the ratio of 3:2 with their capitals on 1st Jan ,2015 as 3,00,000 and 100000 respectively. Interest on capital is allowed @ 5%per annum . Q is allowed an annual salary of rs 3000 which he has not withdrawn during 2015, the profit prior to calculation of interest but after charging Q's salary amounted to rs 45,000. Prepare profit and loss appropriation account showing allocation of profits.?.
P and q partners sharing profits and losses in the ratio of 3:2 with their capitals on 1st Jan ,2015 as 3,00,000 and 100000 respectively. Interest on capital is allowed @ 5%per annum . Q is allowed an annual salary of rs 3000 which he has not withdrawn during 2015, the profit prior to calculation of interest but after charging Q's salary amounted to rs 45,000. Prepare profit and loss appropriation account showing allocation of profits.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about P and q partners sharing profits and losses in the ratio of 3:2 with their capitals on 1st Jan ,2015 as 3,00,000 and 100000 respectively. Interest on capital is allowed @ 5%per annum . Q is allowed an annual salary of rs 3000 which he has not withdrawn during 2015, the profit prior to calculation of interest but after charging Q's salary amounted to rs 45,000. Prepare profit and loss appropriation account showing allocation of profits.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for P and q partners sharing profits and losses in the ratio of 3:2 with their capitals on 1st Jan ,2015 as 3,00,000 and 100000 respectively. Interest on capital is allowed @ 5%per annum . Q is allowed an annual salary of rs 3000 which he has not withdrawn during 2015, the profit prior to calculation of interest but after charging Q's salary amounted to rs 45,000. Prepare profit and loss appropriation account showing allocation of profits.?.
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P and q partners sharing profits and losses in the ratio of 3:2 with their capitals on 1st Jan ,2015 as 3,00,000 and 100000 respectively. Interest on capital is allowed @ 5%per annum . Q is allowed an annual salary of rs 3000 which he has not withdrawn during 2015, the profit prior to calculation of interest but after charging Q's salary amounted to rs 45,000. Prepare profit and loss appropriation account showing allocation of profits.?, a detailed solution for P and q partners sharing profits and losses in the ratio of 3:2 with their capitals on 1st Jan ,2015 as 3,00,000 and 100000 respectively. Interest on capital is allowed @ 5%per annum . Q is allowed an annual salary of rs 3000 which he has not withdrawn during 2015, the profit prior to calculation of interest but after charging Q's salary amounted to rs 45,000. Prepare profit and loss appropriation account showing allocation of profits.? has been provided alongside types of P and q partners sharing profits and losses in the ratio of 3:2 with their capitals on 1st Jan ,2015 as 3,00,000 and 100000 respectively. Interest on capital is allowed @ 5%per annum . Q is allowed an annual salary of rs 3000 which he has not withdrawn during 2015, the profit prior to calculation of interest but after charging Q's salary amounted to rs 45,000. Prepare profit and loss appropriation account showing allocation of profits.? theory, EduRev gives you an
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