Mita, Rita and Sandra were partners in a firm, sharing profits and losses in the ratio of 2 : 2 : 1. Mita had personally guaranteed that in any year Sandra’s share of profit, after allowing interest on capital to all the partners @ 5% per annum and charging interest on drawings @ 4% per annum, would not be less than Rs 10,000.
The capitals of the partners on 1st April, 2015 were:
Mita Rs 80,000, Rita Rs 50,000 and Sandra Rs 30,000.
The net profit for the year ended 31st March, 2016, before allowing or charging any interest amounted to Rs 40,000.
Mita had withdrawn Rs 4,000 on 1st April, 2015, while Sandra withdrew Rs 5,000 during the year.
You are required to prepare the Profit and Loss Appropriation Account for the year 2015-16.
