[ISC] Q. 50 Solution of Fundamentals of Partnership TS Grewal ISC 2023-24 Edition

Roli and Moli started a partnership business on 1st April, 2022 and contributed ₹ 2,00,000 and ₹ 1,50,000 respectively as their capitals. The terms of the partnership agreement are given below:

1. (i) Roli provides her personal office to the firm for business use and charging yearly rent of ₹ 3,00,000 which is credited to her account.
2. (ii) 20% of net profit to be transferred to General Reserve.
3. (iii) Roli and Moli to get a monthly salary of ₹ 5,000 and ₹ 7,500 respectively.
4. (iv) Moli is entitled to a fixed commission of ₹ 17,500.
5. (v) Interest on Capital @ 12% p.a. and Interest on Drawings @ 10% p.a.
6. (vi) Sharing of profit or loss will be in the ratio of their capital contributions.

Profit for the year ended 31st March, 2023 before providing rent to Roli and above appropriations was ₹ 6,13,437. Drawings of Roli and Moli were ₹ 1,00,000 and ₹ 1,25,000 respectively.

Pass necessary Journal entries relating to rent and appropriations out of profits. Prepare Profit & Loss Appropriation Account and Partners’ Capital Accounts assuming that capitals are (a) Fluctuating, and (b) Fixed.