Ali and Bahadur are partners in a firm sharing and profit and losses as Ali 70% and Bahadur 30% .Their respective capital at 1 April 2018 stands as Ali 25000 and Bahadur 20000 .The partners are allowed intrest on capitals @5% P.A Drawing of the partners drawing the year ended 31 march 2019 amonted to Rs 3500 and Rs 2500 respectively.
profit for the year before charging interst on captials and annual salary of Bahadur @3000 amounted to 40000 10% of divisble profit is to be transferd
to reserve .
You are asked to show partners current account and capitals recording the above transaction.
Answers
Answer:
PROFIT AND LOSS APPROPRIATION ACCOUNT
Particulars Amount Particulars Amount
To Interest on Capital
Ali- 25000*5%=1250
Bahadur=20000*5%= 1000 2250 By net profit 40000
To reserve 40000*10% 4000
Bahadur's salary 3000
To profit T/f to
Ali's Capital A/c 21525
Bahadur's Capital A/c 9225 30750
Total 40000 Total 40000
PARTNERS CAPITAL ACCOUNT
Particulars ALI BAHADUR Particulars ALI BAHADUR
To bal c/d 25000 20000 By bal b/d 25000 20000
Total 25000 20000 Total 25000 20000
PARTNERS CURRENT ACCOUNT
Particulars ALI BAHADUR Particulars ALI BAHADUR
To Drawings 3500 2500 By interest on capital 1250 1000
By salary 3000
By P/L Appropriation A/c 21525 9225
By bal c/d 19275 10725
Total 22775 13225 Total 22775 1322
Explanation:
current a/c 19642,Amt transfer to reserve 3475
