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Corporate Accounting

2. Asmua and Babwa are partners in a firm showing profits and losses in the ratio 3:2. Their capitals on 1.4.2003 were OMR 160,000 and OMR 120,000 respectively. The Net Profit of the firm for the year ended 31 March 2004 before making adjustments for the above items was OMR 60,000. Drawings of the partners during the year were, Asma OMR 12,000 and Babwa OMR 8,000. Their partnership deed for the following: (3 Marks) 1. Interest on capital at 5% P.a. 2. Interest on drawings at 6% p.a. 3. Asua and Batwa to get a salary of OMR 10,000 each per annum 4. Asvua to get a commission of 10% on Net profits before charging such commission Show the Profit & Loss Appropriation account and Capital accounts of the partners. Solution: Profit & Loss Appropriation account Amount(OMR) Particulars Particulars Amount(OMR) Fluctuating Capital A/c Particulars Particulars Asma (OMR) Babura (OMR) Asova (OMR) Babou (OMR) 3. X and Y are partners in a firm, sharing profits and losses equally. X is entitled to a salary of OMR 5,000 p.m. Y is entitled to a commission of 10% of Net Profit after charging such commission. Net profit before charging commission and salary was OMR 148,000. Show the profit and loss appropriation account. (3 Marks) Solution: Workings on Calculation of Capital for X and Y Profit & Loss Appropriation account Amount(OMR) Particulars Particulars Amount(OMR)