9. (Fluctuating Capital A/e) A and B are in partnership sharing profits and losses equally,
A's capital is 10,000 and B's capital is * 2,000. Profits for the year ended 31st March, 2015
are 6,000 before charging interest on drawings. Interest at 5 per cent per annum is to be
charged on drawings which were as follows:
A ₹
1st July 2018 200
1st Aug 2018 100
1st Sept 2018 300
1st Nov.2018 50
1st Feb. 2019 100
B
1st June 2018 100
1st July 2018 100
1st Sept. 2018 50
1st Oct. 2018 200
1st Dec. 2018 300
Assuming that the capitals are fluctuating, show the partners capital accounts and profit
and loss account.
Answers
Answer:
Journal Entries (Fixed Capitals)
Profit and loss A/c Dr. 24,000
To Profit and loss App A/c 24,000
(Being profit transferred to P&L App account)
B's salary A/c Dr. 6000
To B's current A/c 6000
(being salary credited)
Profit and loss App A/c Dr. 6000
To B's salary A/c 6000
(Being salary transferred )
Interest on capital A/c Dr. 4,800
To A's current A/c 3600
To B's current A/c 1200
(being interest allowed)
Profit and loss App A/c Dr. 4800
To Interest on capital A/c 4800
(Being interest transferred )
A's current A/c Dr. 200
B's current A/c Dr. 100
To Interest on Drawings A/c 300
(Being interest charged)
Interest on drawings A/c Dr. 300
To Profit and loss App A/c 300
(Being interest transferred )
A's drawings A/c Dr. 6000
B's drawings A/c Dr. 4000
To Cash A/c 10,000
(Being drawings made)
A's current A/c Dr 6000
B's current A/c Dr. 4000
To A's drawings A/c 6000
To B's drawings A/c 4000
(Being drawings transferred)
Profit and loss App A/c Dr. 13,500
To A's current A/c 6750
To B's current A/c 6750
(Being profit distributed)
Profit And Loss Appropriation Account
Particulars Amount Particulars Amount
To Interest on Capital A/c
A-60,000*6%= 3600
B-20000*6%=1200 4800 By Net profit A/c 24,000
To B' s salary A/c 6000 By Interest on Drawings A/c
A- 200
B-100 300
To Profit transferred to-
A's capital A/c- 6750
B's capital A/c-6750 13,500
Total 24,300 Total 24,300
A's Capital Account
Particulars Amount Particulars Amount
To bal c/d 60,000 By bal b/d 60,000
Total 60,000 Total 60,000
B's Capital Account
Particulars Amount Particulars Amount
To bal c/d 20000 By bal b/d 20,000
Total 20000 Total 20000
A's Current Account
Particulars Amount Particulars Amount
To A's drawings A/c 6000 By interest on capital A/c 3600
To interest on drawings A/c 200 By profit and loss App A/c 6750
To bal c/d 4150
Total 10,350 Total 10,350
B's Current Account
Particulars Amount Particulars Amount
To B's drawings 4000 By Interest on capital 1200
To Interest on drawings A/c 100 By B's salary A/c 6000
To Bal c/d 9850 By P&L App A/c 6750
Total 13,950 Total 13,950
A's Drawings Account
Particulars Amount Particulars Amount
To cash A/c 6000 By A's current A/c 6000
Total 6000 Total 6000
B's Drawings Account
Particulars Amount Particulars Amount
To Cash A/c 4000 By B's current A/c 4000
Total 4000 Total 4000
Journal Entries (Fluctuating Capital)
Profit and loss A/c Dr. 24,000
To Profit and loss App A/c 24,000
(Being profit transferred to P&L app account)
B's salary A/c Dr. 6000
To B's capital A/c 6000
(Being the salary credited to B's capital account)
Interest on capital A/c Dr. 4800
To A's capital A/c 3600
To B' s capital A/c 1200
(Being the interest on capital allowed to partners @6%)
Profit and loss App A/c Dr. 4800
To Interest on capital A/c 4800
(Being the interest on capital transferred to P&L app account)
A's capital A/c Dr 200
B's capital A/c Dr. 100
To Interest on drawings A/c 300
(Being interest charged)
Interest on drawings A/c Dr. 300
To Profit and loss App A/c 300
(Being interest on drawings transferred to P&L app account)
A's Drawings A/c Dr. 6000
B's Drawings A/c Dr. 4000
To cash/Bank A/c 10,000
(Being drawings made by partner)
A's capital A/c Dr. 6000
B's capital A/c Dr. 4000
To A's Drawings A/c 6000
To B's Drawings A/c 4000
(Being drawings transferred to capital accounts)
Profit and loss App A/c Dr. 13,500
To A's capital A/c 6750
To B's capital A/c 6750
(Being the profit distributed among partners)
A's CAPITAL ACCOUNT
Particulars Amount Particulars Amount
To A's drawings A/c 6000 By bal b/d 60,000
To Interest on drawings A/c 200 By interest on capital 3600
To Bal c/d 64,150 By P&L App A/c 6750
Total 70,350 Total 70,350
B's CAPITAL ACCOUNT
Particulars Amount Particulars Amount
To B's drawings A/c 4000 By bal b/d 20,000
To Interest on drawings A/c 100 By Interest on capital A/c 1200
To bal c/d 29,850 By B's salary 6000
By P&L App A/c 6750
Total 33,950 Total 33,950
A's DRAWINGS ACCOUNT
Particulars Amount Particulars Amount
To Cash/Bank A/c 6000 By A's Capital A/c 6000
Total 6000 Total 6000
B's DRAWINGS ACCOUNT
Particulars Amount Particulars Amount
To cash/bank 4000 By B's capital A/c 4000
Total 4000 Total 4000