ong>Answer:

Lokesh and Azad Are Partners Sharing PROFITS in the Ratio 3:2, with Capitals of Rs 50,000 and Rs 30,000, Respectively. - Accountancy

Ledger

Lokesh and Azad are partners sharing profits in the ratio 3:2, with capitals of Rs 50,000 and Rs 30,000, respectively. Interest on capital is agreed to be paid @ 6% p.a. Azad is ALLOWED a salary of Rs 2,500 p.a. During 2016, the profits prior to the calculation of interest on capital but after charging Azad’s salary amounted to Rs 12,500. A provision of 5% of profits is to be made in RESPECT of manager’s commission. Prepare ACCOUNTS showing the allocation of profits and partner’s capital accounts.

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SolutionShow SOLUTION

Profit and Loss Adjustment Account

Dr.                                                                                 Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital

By Profit and Loss (12,500 + 2,500)

15,000

Lokesh

3,000

4,800

Azad

1,800

Partner’s Salaries

Azad

2500

Provision for

Manager’s Commission

`15,000 × (5/100)`

750

Profit transferred to

Lokesh Capital

4,170

6,950

Azad Capital

2,780

15,000

15,000

Partners’ Capital Account

Dr.                                                                                Cr.

Particulars

Lokesh

Azad

Particulars

Lokesh

Azad

Balance b/d

50,000

30,000

Interest on Capital

3,000

1,800

Balance c/d

57,170

37,080

Partner’s Salaries

2,500

Profit and Appropriation

4,170

2,780

57,170

37,080

57,170

37,080