Question

Misha and Prisha were partners in a firm sharing profits and losses in the ratio of 3:2. On 1\textsuperscript{st April, 2022, their capital accounts showed balances of ₹ 50,000 and ₹ 30,000, respectively. During the year, Misha withdrew ₹ 12,900 while Prisha withdrew ₹ 9,600. They were allowed interest on capital @ 10\% p.a. Interest on drawings of ₹ 660 was charged on Misha’s drawings and ₹ 540 on Prisha’s drawings. Prisha had advanced a loan of ₹ 20,000 to the firm on 1\textsuperscript{st} August, 2022. The net profit for the year ended 31\textsuperscript{st} March, 2023, amounted to ₹ 22,600. Prepare Profit and Loss Appropriation Account for the year ended 31\textsuperscript{st} March, 2023.}

Hint:

In a Profit and Loss Appropriation Account, ensure to adjust all interest on capital, drawings, and loans before distributing profits among partners.

Answer 1

\[ \text{Interest on Capital:} \] Misha: \( 50,000 \times 10\% = ₹ 5,000 \) Prisha: \( 30,000 \times 10\% = ₹ 3,000 \) \[ \text{Interest on Prisha's Loan:} \] Prisha: \( 20,000 \times 6\% \times \frac{8}{12} = ₹ 800 \) \[ \text{Profit Sharing:} \] Remaining profit after appropriations is shared in the ratio 3:2. Profit and Loss Appropriation Account for the year ended 31\textsuperscript{st March, 2023} \[ \begin{array}{|c|c|c|} \hline Particulars & Amount (₹) & Amount (₹)
\hline To Interest on Capital: & &
\text{Misha} & 5,000 &
\text{Prisha} & 3,000 & 8,000
\hline To Interest on Prisha's Loan & & 800
\hline To Profit Transferred: & &
\text{Misha (3/5)} & 7,980 &
\text{Prisha (2/5)} & 5,320 & 13,300
\hline By Net Profit & & 22,600
\hline By Interest on Drawings: & &
\text{Misha} & 660 &
\text{Prisha} & 540 & 1,200
\hline \end{array} \]