X & Y are grantners with capitals of Rs 60000 and
20000. on 1/4/19 . Net profit (before) for the year
ended 31/3/2020. was Rs 24000. The Deed provides
the following:
(a) y is to get salary of Rs. 24000 p.a.
(b) Interest on Capitals is to be allowed @6%.p.a.
(c) Interest on drawings is to be charged @5%.p.a.
drawing of the partners x and y were rs.60000 and rs.4000 and interest on drawings for x
being Rs.200 and for Y rs100. show how profit will be distrbuted between x and y and also prepare the Capital account of the partners along with their Drawings account if they are fluctuating.
Answers
Explanation:
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