Question

A and B entered into partnership of 1^st April 2009 without any partnership deed. They introduced capitals of Rs 5,00,000 and Rs 3,00,000 respectively. On 31^st October 2009, A advanced Rs 2,00,000 by way of loan to the firm without any agreement as to interest. The Profit and Loss Account for the year ended 31.3.2010 showed a profit of Rs 4,30,000 by the partners could not agree upon the amount of interest on loan to be charged and the basis of division of profits. Pass a journal entry for the distribution of the profit between the partners and prepare the Capital A/cs of both the partners and Loan A/c of ‘A’.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Mar. 31	Profit and Loss Appropriation A/c	Dr.		4,25,000
	To A’s Capital A/c				2,12,500
	To B’s Capital A/c				2,12,500
	(Profit after interest on loan distributed between A and B equally)

Partner’s Capital Accounts
Dr.							Cr.
Date	Particulars	A	B	Date	Particulars	A	B
2010				2009
				Apr. 01	Cash	5,00,000	3,00,000
Mar. 31	To Balance c/d	7,12,500	5,12,500	2010
				Mar. 31	Profit and Loss Appropriation (Profit)	2,12,500	2,12,500
		7,12,500	5,12,500			7,12,500	5,12,500

A’s Loan Account
Dr.					Cr.
Date	Particulars	Amount Rs	Date	Particulars	Amount Rs
			2009
2010			Oct. 31	By Bank A/c	2,00,000
Mar. 31	To Balance c/d	2,05,000		By Interest on Loan	5,000
		2,05,000			2,05,000