Question

Sukesh and Vanita were partners in a firm. Their partnership agreement provides that:

1. Profits would be shared by Sukesh and Vanita in the ratio of 3:2;
2. 5% interest is to be allowed on capital;
3. Vanita should be paid a monthly salary of Rs 600.

The following balances are extracted from the books of the firm on March 31, 2017.

	Sukesh (Rs)	Verma* (Rs)
Capital Accounts	40,000	40,000
Current Accounts	(Cr.)   7,200	(Cr.)   2,800
Drawings	10,850	8,150

Net profit for the year, before charging interest on capital and after charging partner’s salary was Rs 9,500. Prepare the Profit and Loss Appropriation Account and the Partner’s Current Accounts.

Answer 1

Dr.	Profit and Loss Appropriation Account				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Interest on Capital		4,000	By profit and loss A/c		16,700
Sukesh	2,000
Vanita	2,000
To Vanita's salary (600 × 12)		7,200
To profit transfer to
Sukesh's Current A/c `(5,500 × 3/5)`		3,300
Vanita's Current A/c `(5,500 × 2/5)`		2,200
		16,700			16,700

 

Dr.	Partner’s Capital Account				Cr.
Particulars	Sukesh	Vanita	Particulars	Sukesh	Vanita
			By Balance b/d	40,000	40,000
To Balance c/d	40,000	40,000
	40,000	40,000		40,000	40,000

 

Dr.	Partner’s Current Account				Cr.
Particulars	Sukesh	Vanita	Particulars	Sukesh	Vanita
To Drawings	10,850	8,150	By Balance b/d	7,200	2,800
To Balance c/d	1,650	6,050	By Partner’s Salaries		7,200
			By Profit and Loss Appropriation	3,300	2,200
			By Interest on capital	2,000	2,000
	12,500	14,200		12,500	14,200