Advertisements
Advertisements
Question
X, Y, and Z are in the partnership, and on 1st April, 2023, their respective capitals were ₹ 2,00,000, ₹ 1,20,000 and ₹ 1,00,000. Y is entitled to a salary of ₹ 25,000 and Z, ₹ 20,000 per annum, payable before division of profits. Interest is allowed on capital at 5% per annum but is not charged on drawings. Of the net divisible profits of the first ₹ 1,00,000; X is entitled to 40 percent, Y to 35 percent, and Z to 25 percent; over that amount, profits are shared equally. The profit for the year ended 31st March, 2024, after debiting partnership salaries but before charging interest on capital, was ₹ 1,81,000, and the partners had drawn ₹ 8,000 each. Prepare partner’s capital accounts for the year.
Advertisements
Solution
| Dr. | Profit and Loss Appropriation A/c for the year ended 31st march 2024 |
Cr. | |||
| Particulars | Amount (₹) | Amount (₹) | Particulars | Amount (₹) | Amount (₹) |
| To Interest on Capital: | 21,000 | By Net profit | 2,26,000 | ||
| X’s capital A/c | 10,000 | ||||
| Y’s capital A/c | 6,000 | ||||
| Z’s capital A/c | 5,000 | ||||
| To Salary A/c | 45,000 | ||||
| Y | 25,000 | ||||
| Z | 20,000 | ||||
| To Net Profit transferred: | 1,60,000 | ||||
| X | 60,000 | ||||
| Y | 55,000 | ||||
| Z | 45,000 | ||||
| 2,26,000 | 2,26,000 | ||||
| Dr. | Partner’s Capital Account | Cr. | |||||
| Particulars | X | Y | Z | Particulars | X | Y | Z |
| To Drawings | 8000 | 8000 | 8000 | By Balance b/d | 2,00,000 | 1,20,000 | 1,00,000 |
| To balance c/d | 2,62,000 | 1,98,000 | 1,62,000 | By Interest on Capital | 10,000 | 6,000 | 5,000 |
| By Salary | - | 25,000 | 20,000 | ||||
| By Profit and Loss Appropriation A/c (Net profit) | 60,000 | 55,000 | 45,000 | ||||
| 2,70,000 | 2,06,000 | 1,70,000 | 2,70,000 | 2,06,000 | 1,70,000 | ||
Working Notes:
1. Calculation of Net Profit:
Net Profit (given) = ₹ 1,81,000
Partner’s Salaries = ₹ 45,000
Net Profit for Appropriation = 1,81,000 + 45,000
= 2,26,000
2. Calculation of Divisible Profit:
Divisible Profit = ₹ 1,60,000
First ₹ 1,00,000 will be divided in the ratio:
| Partner |
% | Share (₹) |
| X | 40% | 40,000 |
| Y | 35% | 35,000 |
| Z | 25% | 25,000 |
Remaining Profit = 1,60,000 − 1,00,000
= ₹ 60,000
This ₹ 60,000 distributed equally among 3 partners:
= 60,000 ÷ 3
= ₹ 20,000 each
3. Final Profit Share of Partners:
X = 40,000 + 20,000
= ₹ 60,000
Y = 35,000 + 20,000
= ₹ 55,000
Z = 25,000 + 20,000
= ₹ 45,000
