Question

1. On 1st Oct., 2017, Ram and Krishna started a cloth business with capital of 10,000 and 8,000 respectively. As per partnership agreement, partners were entitled to get 10% annual interest on their capital and Krishna was entitled to get a salary of 300 per month. Profit & loss of the firm was to be divided equally among the partners. Each partner was entitled to withdraw 250 per month as drawings with interest. The accounts were closed on 31st March, 2018 and there was profit of 6,050 before allowing interest and salary. Prepare Partners' Capital Accounts on 31st March, 2018 according to :​

Answer 1

Explanation:

Fixed and Fluctuating Capital Account1. On 1st Oct., 2017, Ram and Krishna started a cloth business with capital of 10,000and 8,000 respectively. As per partnership agreement, partners were entitled toget 10% annual interest on their capital and Krishna was entitled to get a salaryof 300 per month. Profit & loss of the firm was to be divided equally among thepartners. Each partner was entitled to withdraw 250 per month as drawings withinterest. The accounts were closed on 31st March, 2018 and there was profit of6,050 before allowing interest and salary.Prepare Partners' Capital Accounts on 31st March, 2018 according to :(i) Fixed and(ii) Fluctuating Capital and Prepare P & L Appropriation Account also.