Sajal and Kajal are partners sharing profits and losses in the ratio of 2:1. On 1st April, their Capitals were: Sajal – Rs. 5,00,000 and Kajal – Rs. 4,00,000. Prepare Profit & Loss Appropriation Account and the Partner’s Capital Accounts for the year ended 31st March from the following information:
a) Interest on Capital is to be allowed @5% p.a.
b) Interest on the Loan advanced by Kajal for the complete year, the amount of loan being Rs. 3,00,000.
c) Interest on partner’s drawings @6% p.a. Drawings: Sajal Rs. 1,00,000 and Kajal Rs. 80,000.
d) 10% of the divisible profit is to be transferred to General Reserve.
Profit, before giving effect to the above, for the year ended 31st March is Rs. 7,02,600.