# 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

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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, 2019. 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.

#### Solution

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

 Dr. Profit and Loss Appropriation Account 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

 Dr. Partners’ Capital Account Cr. Particulars Tripathi Chauhan Particulars Tripathi Chauhan Balance b/d 60,000 40,000 Balance c/d 60000 40000 60000 40000 60000 40000

 Dr. Partners’ Current Account 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:

 Dr. Profit and Loss Appropriation Account 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?

#### 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