Question

Y and Z are partners with capitals of ₹ 2,50,000 and ₹ 1,50,000, respectively, on 1st April, 2023. Each partner is entitled to 9% p.a. interest on his capital. Z is entitled to a salary of ₹ 60,000 p.a. together with a commission of 6% of Net Profit after charging his commission. Net profit for the year ended 31st March, 2024, amounts to ₹ 2,12,000.

Prepare Partner’s Capital Accounts:

1. When capitals are fixed.
2. When capitals are fluctuating.

Hint: When the profit-sharing ratio of the partners is not given in the question, the profits will be shared equally.

Answer 1

Dr.	Profit and Loss Appropriation A/c				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Interest on Capital A/c:		36,000	By Profit and Loss A/c		2,12,000
Y	22,500
Z	13,500
To Z’s salary A/c		60,000
To Z’s commission A/c		12,000
To profit transferred to:		1,04,000
Y	52,000
Z	52,000
		2,12,000			2,12,000

 

Dr.	Fixed Capital Account				Cr.
Particulars	Y	Z	Particulars	Y	Z
			By Balance b/d	2,50,000	1,50,000
To Balance c/d	2,50,000	1,50,000
	2,50,000	1,50,000		2,50,000	1,50,000

 

Dr.	Partner’s Current Account				Cr.
Particulars	Y	Z	Particulars	Y	Z
To Balance c/d	74,500	1,37,500	By Z’s salary A/c		60,000
			By Z’s commission A/c		12,000
			By Interest on Capital A/c	22,500	13,500
			By Profit and Loss Appropriation A/c	52,000	52,000
	74,500	1,37,500		74,500	1,37,500

 

Dr.	Fluctuating Capital Account				Cr.
Particulars	Y	Z	Particulars	Y	Z
To Balance c/d	3,24,500	2,87,500	By Bal b/d	2,50,000	1,50,000
			By Z’s commission A/c		12,000
			By Interest on Capital A/c	22,500	13,500
			By Profit and Loss Appropriation A/c	52,000	52,000
			To Z’s salary A/c		60,000
	3,24,500	2,87,500		3,24,500	2,87,500