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Prepare Partners Capital Accounts, Assuming that the Capital Account Are Fluctuating. - Accountancy

Ledger

Anubha and Kajal are partners of a firm sharing profits and losses in the ratio of 2:1. Their capital, were Rs 90,000 and Rs 60,000. The profit during the year were Rs 45,000. According to partnership deed, both partners are allowed salary, Rs 700 per month to Anubha and Rs 500 per month to Kajal. Interest allowed on capital @ 5% p.a. The drawings at the end of the period were Rs 8,500 for Anubha and Rs 6,500 for Kajal. Interest is to be charged @ 5% p.a. on drawings. Prepare partners capital accounts, assuming that the capital account are fluctuating.

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Solution

a) Note: If Partners’ Salaries, Interest on capital and Interest on Drawing are treated as these have already adjusted in Profit and Loss Account. The Solution will be as

Profit and Loss Appropriation Account

Dr.

 

 

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit Transferred to Current  A/c

 

 

Profit and Loss

 

45,000

Anubha’s Capital

30,000

 

 

 

 

Kajal’s Capital

15,000

45,000

 

 

 

 

 

45,000

 

 

45,000

 

Partners’ Capital Account

Dr.

 

 

 

 

Cr.

Particulars

Anubha

Kajal

Particulars

Anubha

Kajal

Drawings

8,500

6,500

Balance b/d

90,000

60,000

Interest on Drawings

425

325

Partners’ Salaries

8,400

6,000

 

 

 

Interest on Capital

4,500

3,000

Balance c/d

1,23,975

77,175

Profit and Loss Appropriation

30,000

15,000

 

1,32,900

84,000

 

1,32,900

84,000

b)Alternative
Note: If Partners’ salaries, interest on capital and interest on drawings adjusted in Profit and Loss Appropriation Account. The solution will be as.

Profit and Loss Appropriation Account

Dr.

 

 

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Partners’ Salaries:

 

 

Profit and Loss Account

 

45,000

Anubha

8,400

 

Interest on Drawings

 

 

Kajal

6,000

14,400

Anubha

425

 

 

 

 

Kajal

325

750

Interest on Capital:

 

 

 

 

 

Anubha

4,500

 

 

 

 

Kajal

3,000

7,500

 

 

 

Profit transferred to :

 

 

 

 

 

Anubha’s Capital

15,900

 

 

 

 

Kajal’s Capital

7,950

23,850

 

 

 

 

 

45,750

 

 

45,750

 

Partners’ Capital Account

Dr.

 

 

 

 

Cr.

Particulars

Anubha

Kajal

Particulars

Anubha

Kajal

Drawings

8,500

6,500

Balance b/d

90,000

60,000

Interest on Drawings

425

325

Partners’ Salaries

8,400

6,000

 

 

 

Interest on Capital

4,500

3,000

Balance c/d

1,09,875

70,125

Profit and Loss Appropriation

15,900

7,950

 

1,18,800

76,950

 

1,18,800

76,950

Concept: Preparation of Final Accounts
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APPEARS IN

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 1
Chapter 2 Accounting for Partnership Firms-Fundamentals
Exercise | Q 2 | Page 98
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