Question : Medhansh and Priyansh are Partners in a firm sharing profit and losses in the ratio of 3:2. On 31st March 2021 firm's net profit was 11,20,000. The Partnership deed provided interest on capital to Medhansh and Priyansh Rs 1,20,000 and Rs 80,000, respectively, and interest on Drawings for the year amounted to Rs 48,000 from Medhansh and Rs 32000 from Priyansh.
Medansh is entitled to a salary of Rs 1,20,000 p.a., while Priyansh is entitled to a commission @ 10% of net divisible profit.
Question:
Calculate the profit to be transferred to the partner's capital account.
Option 1: Rs 8,00,000
Option 2: Rs 8,80,000
Option 3: Rs 8,56,000
Option 4: Rs 7,20,000
Correct Answer: Rs 8,00,000
Solution : Answer = Rs 8,00,000
| Profit transferred to p&l appropriation a/c(net profit) | 11,20,000 |
| (-) Interest on capital | (2,00,000) |
| Medansh(1,20,000)+Priyansh(80,000) | |
| (+) Interest on drawings | 80,000 |
| Medansh(48,000)+Priyansh(32,000) | |
| (-) Medansh's salary | (1,20,000) |
| (-) Riyansh's commission | (80,000) |
| $\left(8,80,000 \times \frac{10}{110}\right)$ | |
| Profit distributed among the partners | 8,00,000 |
Medansh share=$\left(8,00,000 \times \frac{3}{5}\right)$=4,80,000
Priyansh's share=$\left(8,00,000 \times \frac{2}{5}\right)$=3,20,000.
Hence, the correct option is 1.
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