Sudha, Naresh and Geeta were partners in a firm sharing profits in the ratio of 5 : 3 : 2. Their fixed capitals were Rs. 6,00,000; Rs. 4,00,000 and Rs. 2,00,000 respectively. Besides her capital Geeta had given a loan of Rs. 75,000 to the firm. Their partnership deed provided for the following:

(i) Interest on capital @ 9% p.a.

(ii) Inte rest on partners’ drawings @ 12% p.a.

(iii) Salary to Sudha Rs. 30,000 per month and to Naresh Rs. 40,000 per quarter.

(iv) Interest on Geeta’s loan @ 9% p.a.

During the year Sudha withdrew Rs. 50,000 at the end of each quarter; Naresh withdrew Rs. 50,000 in the beginning of each half year and Geeta withdrew Rs. 70,000 at the end of each half year.

The profit of the firm for the year ended 31-3-2019 before allowing interest on Geeta’s loan was Rs. 7,06,750.

Prepare Profit and Loss Appropriation Account.

Marks-6, CBSE:2019-20/Main/04/Q-19*

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