🚚🚚🚚🚚 Meaning and Concept of
Partnership Profit and Loss
Appropriation Account 🚗🚗🚗🚗
An account in which the net profit of the profit and loss
account made at the end of each accounting period in an organization is
distributed among its owners in accordance with the specified rules or
contracts and transferred to other reserve funds as required is called profit
and Loss Appropriation account. This calculation of distribution for profit and
loss is calculated at the end of the financial report. It is the last stage of
all financial calculations. This is calculated at the end of each financial
year but before preparing Balance Sheet .
🌳🌲🌲Methods of Accounting For Partnership Business 🌳🌲🌲
The Partnership Act of 1932 came into force in India. However, this law does not impose any restrictions or controls on the accounting and accounting of the partnership business. As a result, in the same way as a monopoly, family-dominated unorganized business, the partnership business calculates any one-way or two-way filing system. In a partnership business, a two-way filing system is adopted. such as :- 1) Journal 2) Day Books 3) Ledger 4)Trial Balance 5) Final Account
However, in this transaction, an additional account needs to
be opened only before the final accounts can be created and after calculating
the balance sheet after the profit-loss calculation. This is called profit and
loss appropriation account. This allows the net profit to be distributed among
the partners.
In partnership, the owner is one or two or more. As a
result, not all transactions involving the owner can be liable at the same
time. The interests of each partner are to be carefully considered. For this
purpose, a capital account is kept in the name of each partner. Since each
account has a separate capital account in the account, the balance of the test
and the calculation of that capital are calculated separately.
Normally, the balance sheet of each partnership shows the
share capital towards liability.
It shows the balance of salary, commission, bonus, capital on
interest, share of profit and capital of each partner by subtracting this
drawing and interest on the drawing.
📑 📖📖📖 Problem
Kalyan and Soumit are Partners in a firm Sharing profit and Losses as 3:1 .the Profit and Loss
Account of the firm for the Year ended on 30.06.2020 , Show a Net
profit of Rs.75,000/- . you are Required to prepare Partners’ Capital Accounts Under
Fixed Method By Taking into Consideration the Following Information:
(i)
The Partners’ Capitals as on 01.07.2019 were Kalyan
Rs.60,000 and Soumit Rs.40,000/- . On 01.10.2019 Soumit withdraw Cash Against
a Capital of Rs.10,000/- While on
01.01.2019 A introduced Additional
Capital of Rs.15,000/- interest
on Capital is to be Calculated at
5 % p.a.
(ii)
The Balance in Current Accounts of the Partners
as on 01.07.2019 Were Kalyan
Rs.15,000/- (Cr.) and Soumit Rs.10,000 (Cr.)
(iii)
Partners’ Drawing against profit
Amounted to : Kalyan Rs.20,000/- And Soumit Rs.18,000/-.
Interest on Drawing is to be
Charged at 10 % P.a. at an Average
of 6 Months.
(iv)
Salary to
Kalyan Rs.6,000/- and Commission
to Soumit @ 2 ½
% on Sales of Rs.2,00,000/-
(v)
Kalyan loan of Rs.25,000/- was taken
from Soumit two years Back
and it remains unpaid .
(vi)
Rs.10,000/- is to Be transferred
to the reserve fund of
the firm before distribution
of profit.
🔖✅✅✅ Solution :
In
the Books Of Kalyan & Soumit
Partners
Profit and Loss Appropriation A/c
For the year ended on 30.6.2020
🌈🌈🌈🌈☀☀☀🌟🌟Working Note:
(1)
Calculate For Partners Capital on Interest (5 %
Interest P.a)
Kalyan = Rs.60,000/-
For 3 month (60,000 X 5/100 X
3/12) = Rs. 3,000/-
Additional Rs. 15,000/- For 6 Month (15,000 X 5/100 X 6/12) =Rs. 375/-
Rs. 3,375/-
Soumit =
40,000/- For 3 Month( 40,000 X 5/100 X 3/12) =Rs. 500/-
Additional Rs.30,000/- For 9 Month (30,000 X 5/100 X 9/12) =Rs.1,125/-
Rs.1,625/-
(2)
Calculate For Partners Drawing on Interest (10 %
Interest for 6 Month)
Kalyan = Rs.20,000/- For 6 Month (20,000 X 10/100 X 6/12) = Rs. 1,000/-
Soumit = Rs.18,000/- For 6 Month(18,000 X 10/100 X 6/12) =Rs. 900/-
Rs. 1,900/-
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