Answer :
To prepare the Profit and Loss Appropriation Account for the year 2021, we need to consider several components related to the partnership of Madhu, Priya, and Anargh.
Step 1: Calculate Interest on Capital
- Madhu: 10% of Rs 40,000 = [tex]\frac{10}{100} \times 40,000 = \text{Rs 4,000}[/tex]
- Priya: 10% of Rs 20,000 = [tex]\frac{10}{100} \times 20,000 = \text{Rs 2,000}[/tex]
- Anargh: 10% of Rs 20,000 = [tex]\frac{10}{100} \times 20,000 = \text{Rs 2,000}[/tex]
Total Interest on Capital = 4,000 + 2,000 + 2,000 = Rs 8,000
Step 2: Calculate Anargh's Salary
The monthly salary of Anargh is Rs 2,000. Therefore, for the year:
[tex]\text{Anargh's Total Salary} = 2,000 \times 12 = \text{Rs 24,000}[/tex]
Step 3: Prepare Profit and Loss Appropriation Account
Profit for the Year: Rs 64,000
Debit Side (Appropriations)
- Interest on Capital: Rs 8,000
- Anargh's Salary: Rs 24,000
Total Appropriations = Rs 8,000 + Rs 24,000 = Rs 32,000
Credit Side
- Net Profit: Rs 64,000
Balance Remaining for Distribution = 64,000 - 32,000 = Rs 32,000
Step 4: Distribute Remaining Profit in Capital Ratio
The capital ratio is based on initial capital contributions:
- Madhu: Rs 40,000
- Priya: Rs 20,000
- Anargh: Rs 20,000
The capital ratio is 2:1:1.
Distribute Rs 32,000 in the ratio 2:1:1:
- Madhu's Share: [tex]\frac{2}{4} \times 32,000 = \text{Rs 16,000}[/tex]
- Priya's Share: [tex]\frac{1}{4} \times 32,000 = \text{Rs 8,000}[/tex]
- Anargh's Share: [tex]\frac{1}{4} \times 32,000 = \text{Rs 8,000}[/tex]
Conclusion
The final Profit and Loss Appropriation Account for the firm is as follows:
Debit
- Interest on Capital: Rs 8,000
- Anargh's Salary: Rs 24,000
Credit
- Net Profit: Rs 64,000
Distribution of Rs 32,000 Remaining Profit:
- Madhu: Rs 16,000
- Priya: Rs 8,000
- Anargh: Rs 8,000
