Illustration 13
A, B and C have been in partnership for many years sharing profits and losses in the ratio of 3:2:1 respectively.
The following data for the year ended 31.12.2017 have been extracted from the partnership books:
Sales ₹ 7,40,000; Cost of goods sold ₹ 4,60,000; General expenses ₹ 30,000; Depreciation ₹ 10,000.
The partners have agreed that from 1.7.2017, A will be entitled to a salary of ₹ 30,000 p.a. and the balance of the profits will be shared equally. Sales have been taken place evenly throughout the year and all sales earned a uniform rate of gross profit. No entries to reflect the change in profit sharing ratio have been made in the books before the year end.
You are required to prepare the Trading and Profit and Loss Account, and the Profit and Loss Appropriation Account for the year ended 31.12.2017.