Class 12 Accountancy Chapter 1 Q17 Solution

Question 17:

X and Y are partners sharing profits in the ratio of 3:2 with capitals of ₹8,00,000 and ₹6,00,000 respectively.

Interest on capital is agreed @ 5% p.a. Y is to be allowed an annual salary of ₹60,000 which has not been withdrawn.

Profit for the year ended 31st March, 2024 before interest on capital but after charging Y’s salary was ₹2,40,000.

A provision of 5% of the net profit is to be made in respect of commission to the Manager.

Requirement:

Prepare Profit & Loss Appropriation Account showing the allocation of profits.

Answer:

Provision for Manager’s Commission = ₹15,000 (i.e., 5% of ₹3,00,000)

Share of Profit: