Lata and Mamta are partners with capitals of ₹ 3,00,000 and ₹ 2,00,000 respectively sharing profits as Lata 70% and Mamta 20%. During the year ended 31st March 2024 they earned a profit of ₹ 2,26,440 before allowing interest on partner’s loan

Lata and Mamta are partners with capitals of ₹ 3,00,000 and ₹ 2,00,000 respectively sharing profits as Lata 70% and Mamta 20%. During the year ended 31st March 2024 they earned a profit of ₹ 2,26,440 before allowing interest on partner’s loan. The terms of partnership are as follows:

(i) Interest on Capital is to be allowed @ 7% p.a.

(ii) Lata to get a salary of ₹ 2,500 per month.

(iii) Interest on Loan by Mamta to the Firm of ₹ 80,000 for the whole year.

(iv) Interest on drawings of partners at 8% per annum. Drawings being Lata ₹ 36,000 and Mamta ₹ 48,000.

(v) 1/10th of the distributable profit should be transferred to General Reserve.

Prepare the Profit and Loss Appropriation Account.

[Ans. Share of Profit : Lata ₹ 1,00,800 and Mamta ₹ 43,200.]