Won
2.1. X and Y are partners sharing profits in the ratio of 2 : 1. The undermentioned
balance was extracted from their books as at 31st March, 2014 :
Dr Balance Ch Balances
3,20,000
2.40.000
's Capital
Capital
s Drawings
"s Drawings
Stock (Ist April, 2013)
Purchases and Sales
Debtors and Creditors
Buildings /
Cash in hand
Bank Overdraft
Salaries to Staff
Rent-
Advertising Expenditure
Travelling Expenses
40.000
32,000
45,200
8,68,000
1,52,000
6,00.000
5.900
12.45.000
48.000
27,500
74.700
26,400
5,000
31,300
لی
18,80,500
18,80.500
You are required to prepare the Profit and Loss Account and Profit and Loss
Appropriation Account for the year ended 31st March, 2014 and a Balance Sheet as
on that date. The following adjustments are to be made :
(i) The value of stock on March 31, 2014 was 64,000.
(ii) Charge depreciation on Buildings at 10%.
(iii) Provide for outstanding rent 2,400.
(iv) Partners are entitled to interest on Capital @ 5% and X is entitled to a salary
of 348,000 p.a.
Answers
Explanation:
Journal Entries
Case 1- Profit and Loss A/c Dr. 20,000
To Profit and Loss Appropriation A/c 20,000
(Being profit transferred to p &L app Account)
Profit and loss Appropriation A/c Dr 20,000
To X's capital A/c 8000
To Y's capital A/c 12,000
(Being profit distributed among partners)
Case 2- Profit and loss A/c Dr. 15000
To Profit and Loss Apprpriation A/c 15000
(Being loss transferred to P&L A/c)
X's capital A/c Dr. 6,000
Y's capital A/c Dr. 9000
To profit and loss A/c 15,000
(Being the loss distributed among partners)
No interest on capital is allowed in case of loss.
Case 3- Profit and loss A/c Dr. 21,000
To profit and loss Appropriation A/c 21,000
(Being profit transferred to P&L app account)
Profit and loss appropriation A/c Dr. 18,000
To X's capital A/c 12,000
To Y's capital A/c 6000
(Being interest on capital allowed to partners)
Profit and loss Appropriation A/c Dr. 3000
To X's capital A/c 1200
To Y's capital A/c 1800
(Being the profit distributed among partners)
Case 4- Profit and loss A/c Dr. 20000
To profit and loss Appropriation A/c 20000
(Being the net profit transferred to p&l app account)
Profit and loss Appropriation A/c Dr. 2000
To X's capital A/c 800
To Y's capital A/c 1200
(Being profit distributed among partners)
Profit and loss A/c Dr. 18,000
To X's capital A/c 12,000
To Y's capital A/c 6000
(Being interest allowed)
Case 5- Profit and loss A/c Dr. 18,000
To X's capital A/c 12,000
To Y's capital A/c 6000
(Being interest charged from profit)
X's capital A/c Dr. 6400
Y's capital A/c Dr. 9600
To Profit and loss A/c (18000-2000) 16000
(Being loss transferred to partners account)
Case 6- Profit and loss A/c Dr. 18,000
To X's capital A/c 12,000
To Y's capital A/c 6000
(Being interest allowed to partners)