Question

Misha and Prisha were partners in a firm sharing profits and losses in the ratio of \( 3 : 2 \). On 1\textsuperscript{st April, 2022, their capital accounts showed balances of ₹ 50,000 and ₹ 30,000 respectively. During the year, Misha withdrew ₹ 12,900 while Prisha withdrew ₹ 9,600. They were allowed interest on capital @ 10\% p.a. Interest on drawings of ₹ 660 was charged on Misha’s drawings and ₹ 540 on Prisha’s drawings. Prisha had advanced a loan of ₹ 20,000 to the firm on 1\textsuperscript{st} August, 2022. The net profit for the year ended 31\textsuperscript{st} March, 2023 amounted to ₹ 22,600. Prepare Profit and Loss Appropriation Account for the year ended 31\textsuperscript{st} March, 2023.}

Hint:

Ensure to calculate interest on capital, loan, and drawings before appropriating the remaining profit between the partners based on their profit-sharing ratio.

Answer 1

Misha's interest on capital is calculated as \( 50,000 \times 10\% = ₹ 5,000 \). Prisha's interest on capital is calculated as \( 30,000 \times 10\% = ₹ 3,000 \). Interest on drawings for Misha amounts to ₹ 660. Interest on drawings for Prisha amounts to ₹ 540. Interest on the loan to Prisha is \( 20,000 \times 10\% \times \frac{8}{12} = ₹ 1,333.33 \). The Net Profit is ₹ 22,600. Profit and Loss Appropriation Account: \[ \begin{array}{|l|r|r|} \hline Particulars & Misha's Share (₹) & Prisha's Share (₹)
\hline Net Profit & 22,600 & 22,600
Interest on Capital & 5,000 & 3,000
Interest on Loan & 1,333.33 & \text{--}
Interest on Drawings & (660) & (540)
Profit to be Appropriated & 28,273.33 & 25,060
\hline \end{array} \]