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# .David and John were partners in …

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.David and John were partners in a firm sharing profits in the ratio of 4 : 1. Theircapitals on 1.4.2006 were : David Rs.2,50,000 and John Rs.50,000. The partnershipdeed provided that David will get a commission of 10% on the net profit afterallowing a salary of Rs.2,500 per month to John. The profit of the firm for the yearended 31.3.2007 was Rs.1,40,000. Prepare Profit and Loss Appropriation Account for the year ended 31.3.2007.

Mr Thunder 2 months ago

To prepare the Profit and Loss Appropriation Account for the year ended 31.3.2007, we need to follow these steps: 1. Calculate the total net profit of the firm. 2. Deduct John's monthly salary from the net profit. 3. Calculate David's commission on the remaining profit. 4. Allocate the remaining profit between David and John based on their profit-sharing ratio. Let's do the calculations: 1. Total net profit of the firm: Total net profit = Rs. 1,40,000 2. Deduct John's monthly salary: John's salary for the year = Rs. 2,500 * 12 months = Rs. 30,000 Remaining profit after salary = Rs. 1,40,000 - Rs. 30,000 = Rs. 1,10,000 3. Calculate David's commission: David's commission = 10% of Rs. 1,10,000 = Rs. 11,000 4. Allocate remaining profit between David and John: David's share = (4/5) * Rs. 1,10,000 = Rs. 88,000 John's share = (1/5) * Rs. 1,10,000 = Rs. 22,000 Now, let's prepare the Profit and Loss Appropriation Account:  Profit and Loss Appropriation Account For the year ended 31.3.2007 Particulars Amount (Rs.) ---------------------------------------- Net profit (as per P&L) 1,40,000 Less: John's salary 30,000 -------- Remaining profit 1,10,000 David's commission -11,000 -------- Remaining profit for distribution 99,000 David's share (4/5) 88,000 John's share (1/5) 22,000 -------- Total 1,10,000 --------  This is the Profit and Loss Appropriation Account for the year ended 31.3.2007, showing how the net profit is distributed between David and John after deducting expenses and commission.

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