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Partnership Accounts—Fundamentals 1.17

Solution: PROFIT AND LOSS APPROPRIATION ACCOUNT
Dr. for the year ended 31st March, 2020 Cr.
Particulars ` Particulars `
To Partners’ Salaries: By Profit and Loss A/c (Net Profit) (WN 1) 11,39,500
Vivek 60,000 By Interest on Current A/c:
Naman 48,000 1,08,000 Akash 7,600
To General Reserve (10% of ` 11,39,500) 1,13,950 By Interest on Drawings:
To Akash’s Commission (5% of ` 11,39,500) 56,975 Vivek 3,250
To Interest on Current A/cs: Naman 3,000
Vivek 14,800 Akash 2,750 9,000
Naman 4,800 19,600
To Interest on Capital A/cs:
Vivek 46,000
Naman 36,000
Akash 27,000 1,09,000
To Profit transferred to Current A/cs:
Vivek 3,32,700
Less: Transferred to Akash 16,825 3,15,875
Naman 2,49,525
Less: Transferred to Akash 16,825 2,32,700
Akash 1,66,350
Add: Deficiency met by Vivek 16,825
Deficiency met by Naman 16,825 2,00,000
11,56,100 11,56,100

Working Notes:
1. Calculation of Net Profit transferred to Profit and Loss Appropriation Account:
PROFIT AND LOSS ACCOUNT
Dr. for the year ended 31st March, 2020 Cr.
Particulars ` Particulars `
To Rent (12 × ` 10,000) 1,20,000 By Profit (Given) 12,60,000
To Interest on Loan by Naman By Interest on Loan to Akash
(` 1,00,000 × 6/100 × 7/12) 3,500 (` 1,00,000 × 6/100 × 6/12) 3,000
To Net Profit transferred to Profit and Loss
Appropriation A/c 11,39,500
12,63,000 12,63,000

2. Adjustment Table: Vivek (`) Naman (`) Akash (`)
Divisible Profit (` 7,20,000) wrongly appropriated
equally now taken back (2,40,000) (2,40,000) (2,40,000)
Interest on Capital @ 6% p.a. 48,000 36,000 24,000
Profit to be credited in 4 : 3 : 2 2,72,000 2,04,000 1,36,000
Deficiency in Akash’s Share (32,000) (32,000) 64,000
48,000 (32,000) (16,000)