Question

A, B and C have Capitals of ₹ 60,000, ₹ 30,000 and ₹ 20,000, respectively, on 1st April, 2023, on which they are entitled to interest @ 6% p.a. They share profits in the ratio of 5 : 3 : 2. A is entitled to receive a salary of ₹ 500 per month. Drawings during the year were as follows:

	A (₹)	B (₹)	C (₹)
1st June, 2023	2,000	2,000	1,000
1st Oct., 2023	1,000	1,500	1,000
1st Dec., 2023	500	1,000	500

The rate of interest on drawings is 6% p.a. Profit for the year ended 31st March, 2024 was ₹ 24,605 before charging salary, interest on capital and drawings. Assuming that the capitals are (a) Fixed, (b) Floating, show the Partners’ Capital Accounts, Current Accounts and Profit and Loss Appropriation Account.

Answer 1

Dr.	Profit and Loss Appropriation Account				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Interest on Capital:		6,600	By Net profit		24,605
A	3,600		By Interest on Drawings:		395
B	1,800		A	140
C	1,200		B	165
To A’s salary		6000	C	90
To Partner’s Current A/c:		12,400
A	6,200
B	3,720
C	2,480
		25,000			25,000

 

Dr.	Partner’s Capital Account						Cr.
Particulars	A (₹)	B (₹)	C (₹)	Particulars	A (₹)	B (₹)	C (₹)
To Balance c/d	60,000	30,000	20,000	By Balance b/d	60,000	30,000	20,000
	60,000	30,000	20,000		60,000	30,000	20,000

 

Dr.	Partner’s Current  Account						Cr.
Particulars	A (₹)	B (₹)	C (₹)	Particulars	A (₹)	B (₹)	C (₹)
To Interest on Drawings A/c	140	165	90	By Salary A/c	6,000	-	-
To Drawings A/c	3,500	4,500	2,500	By Interest on capital	3,600	1,800	1,200
To balance c/d	12,160	855	1,090	By Profit and Loss Appropriation A/c	6,200	3,720	2,480
	15,800	5,520	3,680		15,800	5,520	3,680

Working Note:

Interest on drawings:

A’s interest on drawings:

1st June, 2023:

= `2,000 xx 6/100 xx 10/12`

= ₹ 100

1st Oct., 2023:

= `1,000 xx 6/100 xx 6/12`

= ₹ 30

1st Dec., 2023:

= `500 xx 6/100 xx 4/12`

= ₹ 10

Total A’s interest on drawings = 100 + 30 + 10

= ₹ 140

B’s interest on drawings:

1st June, 2023:

= `2,000 xx 6/100 xx 10/12`

= ₹ 100

1st Oct., 2023:

= `1,500 xx 6/100 xx 6/12`

= ₹ 45

1st Dec., 2023:

= `1,000 xx 6/100 xx 4/12`

= ₹ 20

Total B’s interest on drawings = 100 + 45 + 20

= ₹ 165

C’s interest on drawings:

1st June, 2023:

= `1,000 xx 6/100 xx 10/12`

= ₹ 50

1st Oct., 2023:

= `1,000 xx 6/100 xx 6/12`

= ₹ 30

1st Dec., 2023:

= `500 xx 6/100 xx 4/12`

= ₹ 10

Total C’s interest on drawings = 50 + 30 + 10

= ₹ 90