Solution-Prepare firms profit and loss appropriation

Prepare firms profit and loss appropriation

Reference no: EM132623628

Ram and Shyam were partners in a firm. The partnership agreement provides that:

(i) Profit sharing ratio will be "3 : 2.

(ii) Ram will be allowed a salary of Rs. 500 per month.

(iii) Shyam who manages the sales department will be allowed acommission equal to 10% of the net profit after allowing Ram'ssalary.

(iv) 8% interest will be allowed on partners' fixed capitals.

(v) 6% interest will be charged on partners' annual drawings.

(vi) The fixed capitals of Rain and Shyam were Rs. 2,00,000 and Rs.1,50,000 respectively.

Their annual drawings were Rs. 18,000 and Rs. 15,000 respectively. The net profit for the year ended nearly amounted to Rs. 60,000.

Problem 1. Prepare firms Profit and Loss Appropriation and partners' capital Account.

Problem 2. How do partners share the profit in the absence of agreement?

Problem 3. Imagine that you are an active partner in a firm and there is no mention about your salary in a partnership deed. How much is your salary.?

Reference no: EM132623628

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Prepare firms profit and loss appropriation

Reference no: EM132623628

Reference no: EM132623628

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