Amitabh and Babul are partners sharing profits in the ratio of 3:2 , with capitals of Rs. 50,000 and Rs. 30,000 respectively. Interest on capital is a - Accountancy MCQ CUET Accountancy 2025 14 May Shift 1 2026 | ExamTest.live

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Amitabh and Babul are partners sharing profits in the ratio of 3 : 2, with capitals of Rs. 50, 000 and Rs. 30, 000 respectively. Interest on capital is agreed @ 6% p.a. Babul is to be allowed an annual salary of Rs. 2, 500 . Manager is to be allowed commission Rs. 5, 000 . Amitabh has also given a loan on April 01, 2019 of Rs. 50, 000 to the firm without any agreement. During the year 2019-20, the profits earned is Rs. 22, 250 . What amount of profit will be transferred to Profit and Loss Appropriation account :

Solution & Step-by-step Explanation

1. Identify Charges Against Profit:Manager's Commission and Interest on Partner's Loan are statutory charges against profit and must be deducted in the Profit & Loss Account before moving net divisible profits to the Profit & Loss Appropriation account.2. Calculate Interest on Amitabh's Loan:Since there is no agreement, the interest rate is default set at 6% p.a. $ Interest on Loan = 50, 000 \times \frac{6}{100} \times 1 year = Rs. 3, 000 3. N e tP ro f i tC a l c u l a t i o n : Profit given = Rs. 22, 250 $ Less: Manager’s Commission = - Rs. 5, 000 Less: Interest on Amitabh’s Loan = - Rs. 3, 000 Profit Transferable to P&L Appropriation = 22, 250 - 5, 000 - 3, 000 = Rs. 14, 250 (Note: Interest on capital and partner's salary are appropriations, so they are dealt with after this step inside the P&L Appropriation Account itself).

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Amitabh and Babul are partners sharing profits in the ratio of 3 : 2, with capitals of Rs. 50, 000 and Rs. 30, 000 respectively. Interest on capital is agreed @ 6% p.a. Babul is to be allowed an annual salary of Rs. 2, 500 . Manager is to be allowed commission Rs. 5, 000 . Amitabh has also given a loan on April 01, 2019 of Rs. 50, 000 to the firm without any agreement. During the year 2019-20, the profits earned is Rs. 22, 250 . What amount of profit will be transferred to Profit and Loss Appropriation account :

Rs. 14,500

Rs. 14,250

Rs. 14,750

Rs. 14,350

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