Question

Shankar and Manu are partners in a firm. On 1st April, 2014, their fixed capital accounts showed a balance of ₹ 2,00,000 and ₹ 4,00,000 respectively.

On this date, their current account balances were ₹ 50,000 and ₹ 1,00,000 respectively.

On 1st January, 2015, Shankar introduced additional capital of ₹ 2,00,000 while Manu gave a loan of ₹ 1,50,000 to the firm.

The clauses of their partnership deed provided for:

1. Interest on capital is to be allowed at the rate of 10% per annum.
2. Interest on drawings to be charged at the rate of 12% per annum.
3. Profits to be shared by them in the ratio of 3 : 2.
4. 10% of the correct net profit to be transferred to the General Reserve.

During the financial year 2014-15, both partners withdrew ₹ 6,000 each at the beginning of every quarter.

The net profit of the firm, before any interest, for the financial year 2014-15 was ₹ 5,00,000.

You are required to prepare for the year 2014-15:

1. Profit and Loss Appropriation Account.
2. Partner’s Fixed Capital Accounts.
3. Partner’s Current Accounts.
4. Partner’s Loan Account.

Answer 1

Dr.	Profit and Loss Appropriation A/c for the year ended 31st March, 2015				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Interest on Capital A/c:		65,000	By Profit and Loss A/c	5,00,000	4,97,750
Shankar (20,000 + 5,000)	25,000		Less: Interest on Loan by Manu (WN 1)	2,250
Manu	40,000		By Interest on Drawings A/c:		3,600
To General Reserve A/c (10% of  4,97,750)		49,775	Shankar	1,800
To Profit transferred to Current A/c:		3,86,575	Manu	1,800
Shankar	2,31,945
Manu	1,54,630
		5,01,350			5,01,350

 

Dr.	Partner’s Current Accounts				Cr.
Particulars	Shankar (₹)	Manu (₹)	Particulars	Shankar (₹)	Manu  (₹)
To Drawings A/c	24,000	24,000	By Balance b/d	50,000	1,00,000
To Interest on Drawings A/c	1,800	1,800	By Interest on Capital A/c	25,000	40,000
To Balance c/d	2,81,145	2,68,830	By Profit and Loss Appropriation A/c (Profit)	2,31,945	1,54,630
	3,06,945	2,94,630		3,06,945	2,94,630

 

Dr.	Partner’s Capital Accounts				Cr.
Particulars	Shankar (₹)	Manu (₹)	Particulars	Shankar (₹)	Manu (₹)
To Balance c/d	4,00,000	4,00,000	By Balance b/d	2,00,000	4,00,000
			By Bank A/c	2,00,000	-
	4,00,000	4,00,000		4,00,000	4,00,000

 

Dr.	Loan by Manu’s Account				Cr.
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
2015			2015
March 31	To Balance c/d	1,52,250	Jan. 1	By BankA/c	1,50,000
			Mar. 31	By Interest on Loan by Manu A/c	2,250
		1,52,250			1,52,250