Illustrations on Preparation of Capital Accounts of Partners

Illustration -1

Anandu and Ravi  entered into a partnership contributing Rs. 50000 and  Rs.30000 respectively and they agreed to share profit and losses in the ratio 2:1 . Anandu was entitled to a salary of Rs. 5000 p.a.  Interest on capital was to be provided @6% p.a. The drawings of Anandu and Ravi for the year ending December 31, 2014 were Rs. 6000 & Rs.5000 respectively. Interest on drawings Anandu Rs. 300 and Ravi Rs. 200 to be charged. The profit of the firm after providing Anandu’s salary and interest on capital and taking into account interest on drawings were Rs. 15000. Prepare capital accounts of partners , when capitals are fixed an fluctuating.

Sollution

When Capitals are Fixed

Partner’s Capital Account

Dr                                                                                                                                                                                                                    Cr

Date	Particulars	Anandu	Ravi	Date	Particulars	Anandu	Ravi
	To Balance c/d	50000	30000		By Balance b/d	50000	30000
		50000	30000			50000	30000

Partner’s Current Account

Dr                                                                                                                                                                                                                       Cr

Date	Particulars	Anandu	Ravi	Date	Particulars	Anandu	Ravi
	To Drawings To Interest on Drawings To Balance c/d	6000 300 11700	5000 200 1600		By Interest on capital By Salary By P&L Appropriation a/c (Profit)	3000 5000 10000	1800 5000
		18000	6800			18000	6800

When Capital  Fluctuating

Partner’s Capital Account

Dr                                                                                                                                                                                                                        Cr

Date	Particulars	Ajith	Sajith	Date	Particulars	Ajith	Sajith
	To Drawings To Interest on Drawings To Balance c/d	6000 300 61700	5000 200 31600		By Balance b/d By Interest on capital By Salary By P&L Appropriation a/c (Profit)	50000 3000 5000 10000	30000 1800 5000
		68000	36800			68000	36800

Illustration -2

Prepare  capital accounts of partners in both cases when additional capital is also introduced on July 1, 2014 by Ajith Rs.25000 & Sajith Rs.15000.

When Capitals are Fixed

Partner’s Capital Account

Dr                                                                                                                                                                                                                  Cr

Date	Particulars	Anandu	Ravi	Date	Particulars	Anandu	Ravi
	To Balance c/d	75000	45000		By Balance b/d By Bank	50000 25000	30000 15000
		75000	45000			75000	45000

  

Partner’s Current Account

Dr                                                                                                                                                                                                                     Cr

Date	Particulars	Anandu	Ravi	Date	Particulars	Anandu	Ravi
	To Drawings To Interest on Drawings To Balance c/d	6000 300 12450	5000 200 2050		By Interest on capital By Salary By P&L Appropriation a/c (Profit)	3750 5000 10000	2250 5000
		18750	7250			18750	7250

 When Capital  Fluctuating

Partner’s Capital Account

Dr                                                                                                                                                                                                                 Cr

Date	Particulars	Ajith	Sajith	Date	Particulars	Ajith	Sajith
	To Drawings To Interest on Drawings To Balance c/d	6000 300 87450	5000 200 47050		By Balance b/d By Bank By Interest on capital By Salary By P&L Appropriation a/c (Profit)	50000 25000 3750 5000 10000	30000 15000 2250 5000
		93750	52250			93750	52250