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Triphati and Chauhan Are Partners in a Firm Sharing Profits and Losses in the Ratio of 3:2. Their Capitals Were Rs 60,000 and Rs 40,000 as on January 01, 2015. - Accountancy

Ledger

Triphati and Chauhan are partners in a firm sharing profits and losses in the ratio of 3:2. Their capitals were Rs 60,000 and Rs 40,000 as on January 01, 2015. During the year they earned a profit of Rs 30,000. According to the partnership deed both the partners are entitled to Rs 1,000 per month as Salary and 5% interest on their capital. They are also to be charged an interest of 5% on their drawings, irrespective of the period, which is Rs 12,000 for Tripathi, Rs 8,000 for Chauhan. Prepare Partner’s Accounts when, capitals are fixed.

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Solution

a) If interest on Capital and Partners’ salaries and interest on drawings is charged against profit, the solution will be as:

Profit and Loss Appropriation Account

Dr.                                                                                  Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to

 

Profit and Loss

30,000

Triphati’s Current Account

18,000

 

 

Chauhan’s Current Account

12,000

 

 

 

30,000

 

30,000

Partners’ Capital Account

Dr.                                                                                Cr.

Particulars Tripathi Chauhan Particulars Tripathi Chauhan
      Balance b/d 60,000 40,000
Balance c/d 60000 40000      
  60000 40000   60000 40000

Partners’ Current Account

Dr.                                                                                  Cr.

Particulars

Tripathi

Chauhan

Particulars

Tripathi

Chauhan

Drawings

12,000

8,000

Interest on Capital

3,000

2,000

Interest on Drawings

600

400

Partners’ Salaries

12,000

12,000

Balance c/d

20,400

17,600

Profit & Loss Appropriation

18,000

12,000

 

33,000

26,000

 

33,000

26,000

b) ) If interest on Capital and Partners’ salaries and interest on drawings is distributed out of  profit, the solution will be as:

Profit and Loss Appropriation Account

Dr.                                                                                  Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Partners’ Salary

 

 

Profit and Loss (Profit)

 

30,000

Tripathi 1,000 × 12 =

12,000

 

24,000

Interest on Drawings

 

 

Chauhan 1,000 × 12 =

12,000

Tripathi

600

 

1,000

Interest on Capital

 

 

Chauhan

400

Tripathi

3,000

 

5,000

 

 

 

 

 

 

 

 

 

 

 

Chauhan

2,000

 

Profit Transferred to

 

 

 

Tripathi’s Current

1,200

 

2,000

 

Chauhan’s Current

800

 

 

 

31,000

 

 

31,000

Partners’ Capital Account

Dr.                                                                                  Cr.

Particulars

Tripathi

Chauhan

Particulars

Tripathi

Chauhan

 

 

 

Balance b/d

60,000

40,000

Balance c/d

60,000

40,000

 

 

 

 

60,000

40,000

 

60,000

40,000

Partners’ Current Account

Dr.                                                                                  Cr.

Particulars

Tripathi

Chauhan

Particulars

Tripathi

Chauhan

Drawings

12,000

8,000

Partners’ Salaries

12,000

12,000

Interest on Drawings

600

400

Interest on Capital

3,000

2,000

Balance c/d

3,600

6,400

Profit and Loss Appropriation

1,200

800

 

16,200

14,800

 

16,200

14,800

As the question is silent about the treatment of Interest on Capitals, Salary, Interest on Drawings, so we have prepared the solution by following two methods, namely:

1. Charge against Profits

2. Out of Profits

This was done deliberately so as to make students aware-off the two above mentioned methods and also to match the answer with that of given in the NCERT. The appropriate answer to the question following Out of Profit Method should be as:

Tripathi's Current A/c balance Rs 3,600 and

Chauhan's Current A/c balance Rs 6,400.

In case no information regarding the treatment of above items is mentioned in the question, then we usually follow the Out of Profits Method.

Concept: Special Aspects of Partnership Accounts
  Is there an error in this question or solution?
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APPEARS IN

NCERT Class 12 Accountancy - Not-for-profit Organisation and Partnership Accounts
Chapter 2 Accounting for Partnership : Basic Concepts
Numerical Questions | Q 1 | Page 98
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