Profit and Loss Appropriation Account Problems and Solutions
Problem # 1:
Haris and Usama started business in partnership on 1st January, 2019 without any agreement. Mr. Haris introduced capital Rs. 60,000 and Mr. Usama Rs. 40,000. On March 1st, 2019 Mr. Usama advanced Rs. 20,000 by way of loan to the firm. The profit for the year ended 31st, December 2019, was amounted to Rs, 18,000.
Required: Prepare Profit and Loss Appropriation Account at the end of 2019.
Problem # 2:
Basit and Laiba are partners in a firm sharing profit in the ratio of 3:2. They had advanced to the firm a sum of Rs. 50,000 as a loan in their profit-sharing ratio on 1st, July 2019. The partnership deed is silent on interest on loan from partners. Profit for current year was Rs. 85,000.
Required: Prepare Profit and Loss Appropriation Account at the end of March 31st, 2020.
Mukharji, A., & Hanif, M. (2003). Financial Accounting (Vol. 1). New Delhi: Tata McGraw-Hill Publishing Co.
Narayanswami, R. (2008). Financial Accounting: A Managerial Perspective. (3rd, Ed.) New Delhi: Prentice Hall of India.
Ramchandran, N., & Kakani, R. K. (2007). Financial Accounting for Management. (2nd, Ed.) New Delhi: Tata McGraw Hill.