Profit and Loss Appropriation Account for the year ended 31st March 2021

Particulars Amount (Rs.)
Net Profit for the year 40,000
Less: Salary to Partners
A 5/10 * 40,000 = 20,000
B 3/10 * 40,000 = 12,000
C 2/10 * 40,000 = 8,000
40,000
Less: Interest on Capital
A 5/10 * 40,000 = 20,000
B 3/10 * 40,000 = 12,000
C 2/10 * 40,000 = 8,000
40,000
Less: C's Guaranteed Share of Profit (10,000)
Remaining Profit 10,000
Profit Sharing Ratio
A 5/10
B 3/10
C 2/10
Profit Share
A 5/10 * 10,000 = 5,000
B 3/10 * 10,000 = 3,000
C 2/10 * 10,000 = 2,000
Total 10,000
Add: C's Guaranteed Share of Profit 10,000
Total Profit for Appropriation 20,000
Appropriation of Profit
A's Share 5,000 + 20,000 = 25,000
B's Share 3,000 + 20,000 = 23,000
C's Share 10,000 + 10,000 = 20,000
Total 58,000

Explanation:

The given problem is related to Partnership Deed and Profit and Loss Appropriation Account. The following are the key points to be considered while solving the problem:

1. Partners and their Profit Sharing Ratio: The partnership firm has three partners A, B, and C. Their profit sharing ratio is given as 5:3:2.

2. Minimum Guaranteed Share of Profit: According to the partnership deed, partner C is entitled to a minimum guaranteed share of profit of Rs. 10,000 per year.

3. Net Profit for the year: The net profit earned by the partnership firm for the year ended 31st March 2021 is Rs. 40,000.

4. Salary to Partners: Partners may be entitled to a salary as per the partnership deed. In this case, partners A, B, and C are entitled to a salary of Rs. 20,000, Rs. 12,000, and Rs. 8,000 respectively.

5. Interest on Capital: Partners may be entitled to interest on the capital invested by them in the partnership firm. In this case, partners A, B, and C are entitled to an interest of Rs. 20,000, Rs. 12,000, and Rs. 8,000 respectively.

6. Calculation of Remaining Profit: The remaining profit after deducting the salary and interest on capital is calculated as Rs. 10,000.

7. Calculation of Profit Share: The profit share of each partner is calculated based on their profit sharing ratio. In this case, partner A is entitled to a profit share of Rs. 5,000, partner B is entitled to a profit share of Rs. 3,000, and partner C is entitled to a profit share of Rs