Partnership and LLP AccountsQ-7 | Partnership and LLP AccountsQuestion 4863 of 108
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P, Q and R are the 3 partners in partnership firm. Partnership deed includes the following: (i) R is entitled to get salary of 10,000 p.a. (ii) P, Q and R are to get interest @ 6% on their respective capital of 2,50,000; 1,50,000 and 1,00,000. (iii) R is to get extra benefit of 10% of profit in excess of 50,000 after providing for (i) and (ii) mentioned above. (iv) Q is entitled to 10% of profits after providing all the amounts in paras (i), (ii) and (iii) mentioned above. (v) The balance of profits will be shared by P, Q and R is ratio of 5:3: 2. The profits for the year before providing above items are 3,50,000. You are required to prepare Profit and Loss Appropriation Account. [Dec. 2023, 5 Marks]

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Detailed Solution & Explanation

Profit & Loss Appropriation Account Particulars Amount Particulars Amount To R: Salary To Interest on Capital: P Q R To R (Extra Benefit) (10% of 2,60,000 WN 1) To Q (10% of 2,84,000 WN2) 10,000 15,000 9,000 6,000 26,000 28,400 By Net Profit 3,50,000 To Divisible Profits: P 5/10 1,27,800 Q 3/10 76,680 R 2/10 51, 120 2,55,600 3,50,000 3,50,000 Working Notes : 1. 3,50,000 – 10,000 – 30,000 – 50,000 = 2,60,000 2. 3,50,000 – 10,000 – 30,000 – 26,000 = 2,84,000

About This Chapter: Partnership & Companies

Paper

Paper 1: Accounting

Weightage

15-20%

Key Topics

Admission, Retirement, Death, Shares, Debentures

This chapter covers Admission, Retirement, Death, Shares, Debentures and is part of Paper 1: Accounting in the CA Foundation exam.

View Official ICAI Syllabus

Exam Strategy Tip

This topic carries 15-20% weightage. Focus on understanding core concepts rather than memorizing.

Key Concepts to Understand

Partnership Deed

A written agreement between partners detailing the terms and conditions of the partnership (profit sharing ratio, interest on capital, etc.).

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More Questions from Partnership and LLP Accounts

Following are the details of Assets and Liabilities of Mr. Sarthak for the year ended 31 March, 2023 and 31 March, 2024: 31.03.2023 31.03.2024 Assets Buildings Furniture Inventory Sundry debtors Cash at bank Cash in hand Liabilities: Loans Sundry Creditors 2,00,000 75,000 1,05,000 68,000 72,500 2,400 1,50,000 58,400 ? ? 1,95,000 94,000 86,800 3,800 1,25,000 79,500 It was decided to depreciate Building by 5% p.a. and Furniture by 10% p.a. On 1st June, 2023 an additional capital of 40,000 was brought in the business. Proprietor has withdrawn @ ₹ 2,500 p.m. for meeting the family expenses. Prepare Statement of Affairs as on 31 March, 2023 and 31 March, 2024. Find the profit or loss earned by Mr. Sarthak for the year ended 31st March, 2024. [Jan. 2025, 5 Marks]

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