Q X and Y are partners in a firm Their capitals as on April 1, 1996 Rs - Accountancy - Accounting for Not-for-Profit Organisation

Question

Q X and Y are partners in a firm Their capitals as on April 1, 1996
Rs 2,50,000 and Rs 1,80,000 respectively They share profits
equally, On Octorber1, 1996 , they decided that their capitals
should be Rs 2,00,000 each The necessary adjustments in the
capitals were made by withdrawing or introducing cash, According to
the partnership deed, interest on capital is to be allowed at 8% p
a X is to get an annual salary of Rs 4,000 and Y is allowed a
monthly salary of Rs 1,000 It was found that Y was regularly
withdrawing his monthly salary
The manager of the firm is entitled to a commission of 10% of the
profit before any adjustment is made according to the partnership
deed
Net profit for the year ended on 31st March, 1997, before charging
interest on capital and salary was Rs 80,000 Prepare the profit and
loss appropriation account, partner's capital account and current
accounts

Neha Chopra · Accepted Answer

Dear Student

Profit and Loss Appropriation A/c

Date
Particulars

Amount
Date
Particulars

Amount

(Rs)

Salary :

Net profit

72,000

X
4,000

(After manager's commission of Rs 8,000
(80,000 x 10%)

Y
12,000
16,000

Interest on Capital :

X
18,000

Y
11,200
29,200

Profit Transferred :

X
13,400

Y
13,400
26,800

72,000

Partner's Capital A/c (Fixed Capital)

Particulars
X
Y
Particulars
X
Y

Balance b/d
250,000
80,000

Withdrawal of Capital
50,000

Additional Capital

120,000

Bal C/d
200,000
200,000

250,000
200,000

Partner's Current A/c

Particulars
X
Y
Particulars
X
Y

Balance b/d
0
0

Salary
4,000
12,000

Drawings
-
12,000

Interest on Capital
18,000
11,200

Profit and loss Appropriation
13,400
13,400

Bal C/d / (Debit
balance)
35,400
24,600

35,400
36,600

Calculation of Interest on Capital - X

Date
Amount Introduced / (Withdrawn)
No of Months to 31-3-97
Interest @ 8%

1-Apr-96
250,000
12
20,000

1-Oct-96
(50,000)
6
(2,000)

Total
200,000

18,000

Calculation of Interest on Capital - Y

Date
Amount Introduced / (Withdrawn)
No of Months to 31-3-97
Interest @ 8%

1-Apr-96
80,000
12
6,400

1-Oct-96
120,000
6
4,800

Total
200,000

11,200

Regards

Profit and Loss Appropriation A/c

Date	Particulars		Amount	Date	Particulars	Amount
			(Rs)			(Rs)

	Salary :				Net profit	72,000
	X	4,000			(After manager's commission of Rs 8,000 (80,000 x 10%)
	Y	12,000	16,000

	Interest on Capital :
	X	18,000
	Y	11,200	29,200

	Profit Transferred :
	X	13,400
	Y	13,400	26,800

			72,000			72,000

Calculation of Interest on Capital - X

Date	Amount Introduced / (Withdrawn)	No. of Months to 31-3-97	Interest @ 8%
1-Apr-96	250,000	12	20,000
1-Oct-96	(50,000)	6	(2,000)


Total	200,000		18,000