question_answer

A, B and C were partners in a firm having capitals of Rs. 42,000, Rs. 42,000 and Rs. 56,000 respectively, Their current account balances were A : Rs. 7,000, B : Rs. and C : Rs. 1,400 (Dr). According to the partnership deed, the partners were entitled to interest on capital @ 5% p.a. C being the working partner was also entitled to a salary of 4,200 p.a. The profits were to be divided as follows:

(i) The first Rs. 14,000 in proportion of their capital.

(ii) Next Rs. 21,000 in the ratio of 5 : 3 : 2.

(iii) Remaining profits to be shared equally.

The firm made a profit of Rs. 1,09,200 before charging any of the above items. Prepare the profit and loss appropriation account and pass necessary journal entry for apportionment of profit.

Answer:

Profit = Rs. 98,000