Ajay and Vijay are in partnership sharing profits and losses in the ratio of 3:1. On 1st April, 2021, their capitals were ₹ 1,00,000 and ₹ 90,000.

The terms of their partnership are as follows:

(i) Interest on capital to be allowed at @ 6% per annum.
(ii) Interest on drawings to be charged @ 4% per annum.
(iii) Partners to get a salary of ₹1,000 each per month.
(iv) Vijay to get a commission of 2% on the correct net profit.
(v) Any partner taking a loan from the firm to be charged interest on it @ 8% per annum

Ajay had borrowed ₹ 10,000 from the firm on 1st October, 2021.
Vijay had withdrawn ₹ 8,000 on 1st July, 2021.
During the year ending 31st March, 2022, the firm earned a net profit of ₹ 60,000 before any of the provisions mentioned in the partnership deed.

You are required to prepare for the year ending 31st March, 2022:
(i) Profit and Loss Appropriation Account.
(ii) Ajay’s Capital Account.

OR

The partnership agreement of Rohit, Ali and Sneh provides that:

(i) Profits will be shared by them in the ratio of 2:2:1.
(ii) Interest on capital to be allowed at the rate of 6% per annum.
(iii) Interest on drawings to be charged at the rate of 3% per annum.
(iv) Ali to be given a salary of ₹ 500 per month.
(v) Ali’s guarantee to the firm that the firm would earn a net profit of at least ₹ 80,000 per annum and any shortfall in these profits would be personally met by him.
The capitals of the partners on 1st April, 2021, were: Rohit – ₹ 1,20,000; Ali- ₹ 1,00,000; Sneh- ₹ 1,00,000.
All the three partners withdrew ₹1,000 each at the beginning of every month.
The net profit for the year 2021-22 was ₹ 70,000.

You are required to prepare for the year 2021- 2022:
(i) Profit and Loss Appropriation Account.
(ii) Ali’s Capital Account.

Solution

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