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Preparation of capital accounts
- 2. Particulars Ajith Sajith Interest on Capital Drawing (During 2010) Interest on Drawings Salary Commission Share in loss for the year 2010 5% 22500 1350 15000 7500 45000 5% 15000 900 5250 30000 Ajith and Sajith were partners with capitals of Rs.1000000 and Rs.750000respectively. They agree to share profits in the ratio of 3:2. Show how the following transactions will be recorded in the capital accounts of the partners in both the cases when a) the capital are fixed and b) the capitals are fluctuating. The books are closed on December 31 every year.
- 3. Date Particulars Ajith Sajith Date Particulars Ajith Sajith To Balance c/d 1000000 750000 By Balance b/d 1000000 750000 1000000 750000 1000000 750000 Solution – Under Fixed Capital Method. Partner’s Capital Account Dr Cr
- 4. Date Particulars Ajith Sajith Date Particulars Ajith Sajith To Drawings To Interest on Drawings To Profit & loss Appropriation (loss) To Balance c/d 22500 1350 45000 3650 15000 900 30000 ------- By Interest on capital By Salary By Commission By Balance c/d 50000 15000 7500 37500 ------- 5250 3150 72500 45900 72500 45900 Partner’s Current Account Dr Cr
- 5. Date Particulars Ajith Sajith Date Particulars Ajith Sajith To Drawings To Interest on Drawings To Profit & loss Appropriation (loss) To Balance c/d 22500 1350 45000 1003650 15000 900 30000 746850 By Balance b/d By Interest on capital By Salary By Commission 1000000 50000 15000 7500 750000 37500 ------- 5250 1072500 792750 1072500 792750 Solution – Under Fluctuating Capital Method Partner’s Capital Account Dr Cr
- 6. Anandu and Ravi entered into a partnership contributing Rs. 50000 and Rs.30000 respectively and they agreed to share profit and losses in the ratio 2:1 . Anandu was entitled to a salary of Rs. 5000 p.a. Interest on capital was to be provided @6% p.a. The drawings of Anandu and Ravi for the year ending December 31, 2014 were Rs. 6000 & Rs.5000 respectively. Interest on drawings Anandu Rs. 300 and Ravi Rs. 200 to be charged. The profit of the firm after providing Anandu’s salary and interest on capital and taking into account interest on drawings were Rs. 15000. Illustration - 2
- 7. Date Particulars Anandu Ravi Date Particulars Anandu Ravi To Balance c/d 50000 30000 By Balance b/d 50000 30000 50000 30000 50000 30000 When Capitals are Fixed Partner’s Capital Account Dr Cr
- 8. Date Particulars Anandu Ravi Date Particulars Anandu Ravi To Drawings To Interest on Drawings To Balance c/d 6000 300 11700 5000 200 1600 By Interest on capital By Salary By P&L Appropriation a/c (Profit) 3000 5000 10000 1800 5000 18000 6800 18000 6800 Partner’s Current Account Dr Cr
- 9. Date Particulars Anandu Ravi Date Particulars Anandu Ravi To Drawings To Interest on Drawings To Balance c/d 6000 300 61700 5000 200 31600 By Balance b/d By Interest on capital By Salary By P&L Appropriation a/c (Profit) 50000 3000 5000 10000 30000 1800 5000 68000 36800 68000 36800 When Capital Fluctuating Partner’s Capital Account Dr Cr
- 10. Date Particulars Anandu Ravi Date Particulars Anandu Ravi To Balance c/d 75000 45000 By Balance b/d By Bank 50000 25000 30000 15000 75000 45000 75000 45000 When Capitals are Fixed Partner’s Capital Account Dr Cr
- 11. Date Particulars Anand u Ravi Date Particulars Anand u Ravi To Drawings To Interest on Drawings To Balance c/d 6000 300 12450 5000 200 2050 By Interest on capital By Salary By P&L Appropriation a/c (Profit) 3750 5000 10000 2250 5000 18750 7250 18750 7250 Partner’s Current Account Dr Cr
- 12.
- 13. Date Particulars Anandu Ravi Date Particulars Anandu Ravi To Drawings To Interest on Drawings To Balance c/d 6000 300 87450 5000 200 47050 By Balance b/d By Bank By Interest on capital By Salary By P&L Appropriation a/c (Profit) 50000 25000 3750 5000 10000 30000 15000 2250 5000 93750 52250 93750 52250 When Capital Fluctuating Partner’s Capital Account Dr Cr
- 14. Particulars Sajeev (Rs) Rajeev(Rs) Capitals on 1st January 2011 150000 125000 Drawings 15000 12500 Partner’s Salaries 10000 12000 Partner’s Commission 9000 14000 Interest on Partner’s loan 2500 1000 Interest on Capital 16000 12000 Interest on Drawings 800 500 Share of profit 30000 24000 Current a/c balance 3500(Cr) 3500(Dr) Illustration – 4 From the following particulars prepare the capital accounts of partners of Sajeev and Rajeev in both the cases when a) the capitals are fixed and b) the capitals are fluctuating . books are closed on 31st December 2011.
- 15. Date Particulars Sajeev Rajeev Date Particulars Sajeev Rajeev To Balance c/d 150000 125000 By Balance b/d 150000 125000 150000 125000 150000 125000 When Capitals are Fixed Partner’s Capital Account Dr Cr
- 16. Date Particulars Sajeev Rajeev Date Particulars Sajeev Rajeev To Balance b/d To Drawings To Interest on Drawings To Balance c/d 15000 800 55200 3500 12500 500 44900 By balance b/d By Interest on capital By Salary By commission By Interest on loan By P&L Appropriation a/c (Profit) 3500 16000 10000 9000 2500 30000 12000 12000 14000 1000 24000 71000 63000 71000 63000 Partner’s Current Account Dr Cr
- 17. Date Particulars Sajeev Rajeev Date Particulars Sajeev Rajeev To Drawings To Interest on Drawings To Balance c/d 15000 800 199200 12500 500 174000 By Balance b/d By Interest on capital By Salary By commission By P&L Appropriation a/c (Profit) 150000 16000 10000 9000 30000 125000 12000 12000 14000 24000 215000 187000 215000 187000 When Capital Fluctuating Partner’s Capital Account Dr Cr
- 18. Interest on loan is treated as outside liability so is credited to partner’s current account. But when the capital account is on fluctuating method, the interest on loan will be credited to a separate accured interest account or partner’s loan account. Note