Old and Young are equal partners in a firm. Their draft accounts for the year ended 31st March, 2023 show profit of ₹ 1,50,000 before taking into account interest @ 10% p.a. on loan for ₹ 50,000 from Young. Partners are to get salary as follows:
Old and Young are equal partners in a firm. Their draft accounts for the year ended 31st March 2023 show a profit of ₹ 1,50,000 before taking into account interest @ 10% p.a. on a loan for ₹ 50,000 from Young. Partners are to get salary as follows:
Old: ₹ 15,000 per annum
Young: ₹ 10,000 per annum
What is Old’s total appropriation of profit for the year ended 31st March 2023?
a) ₹ 77,500
b) ₹ 70,000
c) ₹ 75,000
d) ₹ 80,000
Ans – c)
Explanation:-
Profit for the year ₹ 1,50,000
Interest on Young’s Loan = 50,000 * 10% = ₹ 5,000
Profit after interest on Young’s Loan = 1,50,000 – 5000 = ₹ 1,45,000
Distributable Profit = 1,45,000 – old salary – Young salary
Distributable Profit = 1,45,000 – 15000 – 10000 = ₹ 1,20,000
Old Share in Distributable Profit = 1,20,000 * 1/2 = ₹ 60,000
Total Appropriation of Old = Share in Distributable Profit + Old’s Salary
Total Appropriation of Old = 60,000 + 15,000 = ₹ 75,000
