Page 34 - ISCDEBK-12

1.24 Double Entry Book Keeping (Section A)—ISC XII

(v) Z is entitled to a commission @ 10% on the net profit (after charging the above provisions) and after
charging his commission.
(vi) 25% of the net profit (after charging all the above provisions) should be transferred to the
Reserve Fund.
(vii) Partners will share profits and losses in the ratio of their capitals.
The profit for the year ended 31st March, 2018 amounted to ` 60,000.
You are required to prepare Profit and Loss Appropriation Account and Partners’ Capital Accounts.

8. Dhoni, Modi and Soni are in partnership, sharing profits and losses in the ratio of 2 : 2 : 1 respectively.
Interest is charged on Partners’ Drawings @ 6% p.a. and credited to Partners’ Capital Account Balances
@ 6% p.a.
Modi is the firm’s Marketing Manager and for his specialised services, he is credited with a salary of
` 5,000 per quarter.
During the year ended 31st March, 2018, net profit of the firm was ` 1,55,000 and the partners’
drawings were:
`
Dhoni : 30,000
Modi : 20,000
Soni : 20,000

In each case, the above drawings were made in two equal instalments on 30th September, 2017 and
31st March, 2018.
On 30th September, 2017, the firm agreed that Dhoni should withdraw ` 25,000 from his capital
account and that Soni should subscribe a similar amount to his Capital Account.
The balances of the partners’ accounts on 1st April, 2017 were:
All Credit Balances
Capital Accounts Current Accounts
` `
Dhoni : 2,00,000 16,000
Modi : 1,75,000 14,000
Soni : 1,50,000 12,000
Transfer 5% of the net profit to the Reserve Fund of the firm.
Required:
(i) Prepare firm’s Profit and Loss Appropriation Account for the year ended 31st March, 2018.
(ii) Prepare Partners’ Capital and Current Accounts for the year ended 31st March, 2018.
(ISC 1993, Modified)
9. A, B and C are partners in a firm. A and B sharing profits in the ratio of 5 : 3 and C receiving a salary of
` 150 per month, plus a commission of 5% on the profits after charging such salary and commission
or 1/5th of the profits of the firm, whichever is larger. Any excess of the latter over the former is,
under the partnership agreement, to be borne personally by A.
The profits for the year ended 31st March, 2018 amounted to ` 10,710 after charging C’s salary.
Prepare Profit and Loss Appropriation Account showing the division of the profits of the year.