Commerce Exam > Commerce Questions > Q. 7. X and Y are partners with capitals of ₹...
Start Learning for Free
Q. 7. X and Y are partners with capitals of ₹1,00,000 and 80,000 respectively on 1st April, 2016 and their profit sharing ratio is 2: 1. Interest on capital is agreed @ 12% p.a. Y is to be allowed an annual salary of ₹6,000. The profit for the year ended 31st March, 2017 amounted to 50,000. Manager is entitled to a commission of 10% of the profits. Prepare Profit and Loss Appropriation Account and Capital Accounts.?
Most Upvoted Answer
Q. 7. X and Y are partners with capitals of ₹1,00,000 and 80,000 respe...
**Profit and Loss Appropriation Account**
The Profit and Loss Appropriation Account is prepared to distribute the profits of a partnership among the partners and to account for various appropriation items such as interest on capital, partner's salary, and manager's commission.
**Calculation of Interest on Capital**
Interest on capital is calculated on the capital balances of the partners. In this case, X's capital is ₹1,00,000 and Y's capital is ₹80,000. The interest rate agreed upon is 12% per annum.
Interest on X's capital = ₹1,00,000 * 12/100 = ₹12,000
Interest on Y's capital = ₹80,000 * 12/100 = ₹9,600
**Calculation of Y's Salary**
Y is entitled to an annual salary of ₹6,000. This salary is treated as an expense for the partnership and is deducted from the profits before calculating the interest on capital.
**Calculation of Manager's Commission**
The manager is entitled to a commission of 10% of the profits. The commission is calculated after deducting interest on capital and partner's salary from the profits.
Manager's commission = ₹50,000 - (Interest on X's capital + Interest on Y's capital + Y's salary)
= ₹50,000 - (₹12,000 + ₹9,600 + ₹6,000) = ₹22,400
**Distribution of Profits**
The remaining profit after deducting all the appropriation items is distributed among the partners according to their profit sharing ratio. In this case, the profit sharing ratio is 2:1.
Profit for distribution = ₹50,000 - (Interest on X's capital + Interest on Y's capital + Y's salary + Manager's commission)
= ₹50,000 - (₹12,000 + ₹9,600 + ₹6,000 + ₹22,400) = ₹50,000 - ₹49,000 = ₹1,000
Distribution of profit among partners:
- X's share = 2 / (2 + 1) * ₹1,000 = ₹666.67
- Y's share = 1 / (2 + 1) * ₹1,000 = ₹333.33
**Capital Accounts**
The capital accounts of the partners are prepared to record their capital balances, interest on capital, salary, and share of profit or loss.
X's Capital Account:
Opening capital balance (1st April, 2016) = ₹1,00,000
Add: Interest on capital = ₹12,000
Less: Share of profit = ₹666.67
Closing capital balance (31st March, 2017) = ₹1,00,000 + ₹12,000 - ₹666.67 = ₹1,11,333.33
Y's Capital Account:
Opening capital balance (1st April, 2016) = ₹80,000
Add: Interest on capital = ₹9,600
Less: Salary = ₹6,000
Less: Share of profit = ₹333.33
Closing capital balance (31st March, 2017) = ₹80,000 + ₹9,600 - ₹6,000 - ₹333.33 = ₹83,266.67
In conclusion, the Profit and Loss Appropriation Account shows the distribution of profits among the partners, while the Capital Accounts record the
The Profit and Loss Appropriation Account is prepared to distribute the profits of a partnership among the partners and to account for various appropriation items such as interest on capital, partner's salary, and manager's commission.
**Calculation of Interest on Capital**
Interest on capital is calculated on the capital balances of the partners. In this case, X's capital is ₹1,00,000 and Y's capital is ₹80,000. The interest rate agreed upon is 12% per annum.
Interest on X's capital = ₹1,00,000 * 12/100 = ₹12,000
Interest on Y's capital = ₹80,000 * 12/100 = ₹9,600
**Calculation of Y's Salary**
Y is entitled to an annual salary of ₹6,000. This salary is treated as an expense for the partnership and is deducted from the profits before calculating the interest on capital.
**Calculation of Manager's Commission**
The manager is entitled to a commission of 10% of the profits. The commission is calculated after deducting interest on capital and partner's salary from the profits.
Manager's commission = ₹50,000 - (Interest on X's capital + Interest on Y's capital + Y's salary)
= ₹50,000 - (₹12,000 + ₹9,600 + ₹6,000) = ₹22,400
**Distribution of Profits**
The remaining profit after deducting all the appropriation items is distributed among the partners according to their profit sharing ratio. In this case, the profit sharing ratio is 2:1.
Profit for distribution = ₹50,000 - (Interest on X's capital + Interest on Y's capital + Y's salary + Manager's commission)
= ₹50,000 - (₹12,000 + ₹9,600 + ₹6,000 + ₹22,400) = ₹50,000 - ₹49,000 = ₹1,000
Distribution of profit among partners:
- X's share = 2 / (2 + 1) * ₹1,000 = ₹666.67
- Y's share = 1 / (2 + 1) * ₹1,000 = ₹333.33
**Capital Accounts**
The capital accounts of the partners are prepared to record their capital balances, interest on capital, salary, and share of profit or loss.
X's Capital Account:
Opening capital balance (1st April, 2016) = ₹1,00,000
Add: Interest on capital = ₹12,000
Less: Share of profit = ₹666.67
Closing capital balance (31st March, 2017) = ₹1,00,000 + ₹12,000 - ₹666.67 = ₹1,11,333.33
Y's Capital Account:
Opening capital balance (1st April, 2016) = ₹80,000
Add: Interest on capital = ₹9,600
Less: Salary = ₹6,000
Less: Share of profit = ₹333.33
Closing capital balance (31st March, 2017) = ₹80,000 + ₹9,600 - ₹6,000 - ₹333.33 = ₹83,266.67
In conclusion, the Profit and Loss Appropriation Account shows the distribution of profits among the partners, while the Capital Accounts record the
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
|
Explore Courses for Commerce exam
|
|
Top Courses for CommerceView all
Q. 7. X and Y are partners with capitals of ₹1,00,000 and 80,000 respectively on 1st April, 2016 and their profit sharing ratio is 2: 1. Interest on capital is agreed @ 12% p.a. Y is to be allowed an annual salary of ₹6,000. The profit for the year ended 31st March, 2017 amounted to 50,000. Manager is entitled to a commission of 10% of the profits. Prepare Profit and Loss Appropriation Account and Capital Accounts.?
Question Description
Q. 7. X and Y are partners with capitals of ₹1,00,000 and 80,000 respectively on 1st April, 2016 and their profit sharing ratio is 2: 1. Interest on capital is agreed @ 12% p.a. Y is to be allowed an annual salary of ₹6,000. The profit for the year ended 31st March, 2017 amounted to 50,000. Manager is entitled to a commission of 10% of the profits. Prepare Profit and Loss Appropriation Account and Capital Accounts.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Q. 7. X and Y are partners with capitals of ₹1,00,000 and 80,000 respectively on 1st April, 2016 and their profit sharing ratio is 2: 1. Interest on capital is agreed @ 12% p.a. Y is to be allowed an annual salary of ₹6,000. The profit for the year ended 31st March, 2017 amounted to 50,000. Manager is entitled to a commission of 10% of the profits. Prepare Profit and Loss Appropriation Account and Capital Accounts.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Q. 7. X and Y are partners with capitals of ₹1,00,000 and 80,000 respectively on 1st April, 2016 and their profit sharing ratio is 2: 1. Interest on capital is agreed @ 12% p.a. Y is to be allowed an annual salary of ₹6,000. The profit for the year ended 31st March, 2017 amounted to 50,000. Manager is entitled to a commission of 10% of the profits. Prepare Profit and Loss Appropriation Account and Capital Accounts.?.
Q. 7. X and Y are partners with capitals of ₹1,00,000 and 80,000 respectively on 1st April, 2016 and their profit sharing ratio is 2: 1. Interest on capital is agreed @ 12% p.a. Y is to be allowed an annual salary of ₹6,000. The profit for the year ended 31st March, 2017 amounted to 50,000. Manager is entitled to a commission of 10% of the profits. Prepare Profit and Loss Appropriation Account and Capital Accounts.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Q. 7. X and Y are partners with capitals of ₹1,00,000 and 80,000 respectively on 1st April, 2016 and their profit sharing ratio is 2: 1. Interest on capital is agreed @ 12% p.a. Y is to be allowed an annual salary of ₹6,000. The profit for the year ended 31st March, 2017 amounted to 50,000. Manager is entitled to a commission of 10% of the profits. Prepare Profit and Loss Appropriation Account and Capital Accounts.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Q. 7. X and Y are partners with capitals of ₹1,00,000 and 80,000 respectively on 1st April, 2016 and their profit sharing ratio is 2: 1. Interest on capital is agreed @ 12% p.a. Y is to be allowed an annual salary of ₹6,000. The profit for the year ended 31st March, 2017 amounted to 50,000. Manager is entitled to a commission of 10% of the profits. Prepare Profit and Loss Appropriation Account and Capital Accounts.?.
Solutions for Q. 7. X and Y are partners with capitals of ₹1,00,000 and 80,000 respectively on 1st April, 2016 and their profit sharing ratio is 2: 1. Interest on capital is agreed @ 12% p.a. Y is to be allowed an annual salary of ₹6,000. The profit for the year ended 31st March, 2017 amounted to 50,000. Manager is entitled to a commission of 10% of the profits. Prepare Profit and Loss Appropriation Account and Capital Accounts.? in English & in Hindi are available as part of our courses for Commerce.
Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of Q. 7. X and Y are partners with capitals of ₹1,00,000 and 80,000 respectively on 1st April, 2016 and their profit sharing ratio is 2: 1. Interest on capital is agreed @ 12% p.a. Y is to be allowed an annual salary of ₹6,000. The profit for the year ended 31st March, 2017 amounted to 50,000. Manager is entitled to a commission of 10% of the profits. Prepare Profit and Loss Appropriation Account and Capital Accounts.? defined & explained in the simplest way possible. Besides giving the explanation of
Q. 7. X and Y are partners with capitals of ₹1,00,000 and 80,000 respectively on 1st April, 2016 and their profit sharing ratio is 2: 1. Interest on capital is agreed @ 12% p.a. Y is to be allowed an annual salary of ₹6,000. The profit for the year ended 31st March, 2017 amounted to 50,000. Manager is entitled to a commission of 10% of the profits. Prepare Profit and Loss Appropriation Account and Capital Accounts.?, a detailed solution for Q. 7. X and Y are partners with capitals of ₹1,00,000 and 80,000 respectively on 1st April, 2016 and their profit sharing ratio is 2: 1. Interest on capital is agreed @ 12% p.a. Y is to be allowed an annual salary of ₹6,000. The profit for the year ended 31st March, 2017 amounted to 50,000. Manager is entitled to a commission of 10% of the profits. Prepare Profit and Loss Appropriation Account and Capital Accounts.? has been provided alongside types of Q. 7. X and Y are partners with capitals of ₹1,00,000 and 80,000 respectively on 1st April, 2016 and their profit sharing ratio is 2: 1. Interest on capital is agreed @ 12% p.a. Y is to be allowed an annual salary of ₹6,000. The profit for the year ended 31st March, 2017 amounted to 50,000. Manager is entitled to a commission of 10% of the profits. Prepare Profit and Loss Appropriation Account and Capital Accounts.? theory, EduRev gives you an
ample number of questions to practice Q. 7. X and Y are partners with capitals of ₹1,00,000 and 80,000 respectively on 1st April, 2016 and their profit sharing ratio is 2: 1. Interest on capital is agreed @ 12% p.a. Y is to be allowed an annual salary of ₹6,000. The profit for the year ended 31st March, 2017 amounted to 50,000. Manager is entitled to a commission of 10% of the profits. Prepare Profit and Loss Appropriation Account and Capital Accounts.? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup