Illustration -1
Anil , Rahim and
Vishal set up a partnership firm on January 1, 2010. They contributed Rs.
50,000, Rs. 40,000 and Rs. 30,000 respectively as their capitals and decided to
share profits in the ratio of 3:2:1. The partnership deed provided that Anil is
to be paid a salary of Rs. 1,000 p.m. and Rahim a commission of Rs. 5,000. It
also provided that interest on capital be allowed @ 6% p.a. The drawings for
the year were: Anil Rs. 6,000, Rahim Rs. 4,000 and Vishal Rs. 2,000. Interest
on drawings Rs. 270 on Anil’s drawings, Rs. 180 on Rahim's drawings and Rs. 90
on Vishal's drawings. The net amount of profit as per the profit and loss account
for the year ended 2010 was Rs. 35,660. You are required to record the necessary
journal entries relating to appropriation of profit and prepare the profit and
loss appropriation account and the partners' capital accounts.
Journal Entry
in the Books of Anil , Rahim and Vishal
|
Date
|
Particular
|
L.F
|
Debit
Amount
(Rs.)
|
Credit
Amount
(Rs.)
|
|
|
Profit and Loss a/c Dr.
Profit and Loss Appropriation a/c
(Transfer of Profit to Profit
and Loss Appropriation Account)
|
|
35,660
12,000
12,000
5,000
5,000
7,200
7,200
270
180
90
540
12,000
|
35,600
12,000
12,000
5,000
5,000
3,000
2,400
1,800
7,200
540
540
6,000
4,000
2,000
|
|
Anil's Salary a/c Dr.
Anil's Capital a/c
(Amount of Anil's Salary)
|
||||
|
Profit and Loss
Appropriation a/c Dr.
Anil's Salary a/c
(Transfer of Anil's
Salary to Profit and Loss Appropriation Account)
|
||||
|
Rahim’s Commission a/c Dr.
Rahim’s Capital a/c
(Amount of Rahim’s Commission)
|
||||
|
Profit
and Loss Appropriation a/c Dr.
Rahim’s Commission
a/c
(Transfer
of Rahim’s Commission to Profit and Loss Appropriation
Account)
|
||||
|
Interest on Capital a/c Dr.
Anil's
Capital a/c
Rahim’s Capital a/c
Vishal's
Capital a/c
(Amount of interest on capital)
|
||||
|
Profit and Loss Appropriation a/c Dr. Interest on Capital a/c
(Transfer
of Interest on Capital to Profit and Loss Appropriation Account)
|
||||
|
Anil's Capital a/c Dr.
Rahim's Capital a/c
Vishal's Capital a/c
Interest
on Drawings a/c
(Amount of interest on drawings)
|
||||
|
Interest On Drawings a/c Dr.
Profit
and Loss Appropriation a/c
(Transfer of Interest on drawings to Profit and
Loss Appropriation Account)
|
||||
|
Profit and Loss Appropriation a/c Dr.
Anil's
Capital a/c
Rahim's Capital a/c
Vishal's
Capital a/c
(Amount of profit on appropriation)
|
Profit and Loss Appropriation Account
Dr for the year
ended December 31,2010 Cr
|
Particulars
|
Amount
|
Particulars
|
Amount
|
|
To Anil's Salary
To
Rahim’s Commission
To Interest on capital
Anil's
Capital 3,000
Rahim's
Capital 2,400
Vishal's Capital 1,800
Anil 6,000
Rahim 4,000
Vishal 2,000
|
12000
5000
7200
12000
|
By
Net profit as per
Profit and loss a/c
By
interest on drawings
Anil's Capital 270
Rahim's capital 180
Vishal’s Capital 90
|
35,660
540
|
|
|
36,200
|
|
36,200
|
Partner’s
Capital Account
Dr Cr
|
Date
|
Particulars
|
Anil
|
Rahim
|
Vishal
|
Date
|
Particulars
|
Anil
|
Rahim
|
Vishal
|
|
|
To Drawings
To Interest on Drawings
To Balance c/d
|
6000
270
64730
|
4000
180
47220
|
2000
90
31710
|
|
By Balance b/d
By Interest on capital
By Salary
By Commission
By P&L Appropriation a/c
(Profit)
|
50000
3000
12000
------
6000
|
40000
2400
------
5000
4000
|
30000
1800
-------
-------
2000
|
|
71000
|
51400
|
33800
|
71000
|
51400
|
33800
|
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|
|
|
|
|
|
|
Illustrations
– 2
Reghu and Ramu
are partners in a firm sharing profits in the ratio of 3:2. The balance in
their capital and current accounts as on January1, 2000 were as under :
|
Items
|
Reghu (Rs.)
|
Ramu (Rs.)
|
|
Capital
Account
|
30000
|
20000
|
|
Current
Account (Credit)
|
10000
|
8000
|
The
partnership deed provided that Reghu is to be paid salary @ Rs. 500 p.m. whereas
Ramu is to get commission of Rs. 4,000 for the year. Interest on capital is to
be allowed @ 6% p.a. The drawings of Reghu and Ramu for the year were Rs. 3,000
and Rs. 1,000, respectively. Interest on drawings for Reghu and Ramu works out
at Rs. 75 and Rs. 25, respectively. The net profit of the firm before making
these adjustments was Rs. 24,900.Prepare the Profit and Loss Appropriation Account
and the partners' capital and current accounts.
Profit and Loss Appropriation Account for the year
ended Dec. 31,2000
Dr. Cr.
|
Particulars
|
Amount
|
Particulars
|
Amount
|
|
To Reghu's Salary
To
Ramu’s Commission
To Interest on capital
Reghu's
Capital 1800
Ramu's
Capital 1200
To
Profit transferred to Capital
accounts
Reghu 7200
Ramu 4,800
|
6000
4000
3000
12000
|
By
Net profit as per
Profit and loss a/c
By
interest on drawings
Reghu's Capital 75
Ramu's capital 25
|
24900
100
|
|
|
25000
|
|
25000
|
When
Capitals are Fixed
Partner’s
Capital Account
Dr Cr
|
Date
|
Particulars
|
Sajeev
|
Rajeev
|
Date
|
Particulars
|
Sajeev
|
Rajeev
|
|
|
To
Balance c/d
|
30000
|
20000
|
|
By
Balance b/d
|
30000
|
20000
|
|
30000
|
20000
|
30000
|
20000
|
||||
|
|
|
|
|
Partner’s
Current Account
Dr Cr
|
Date
|
Particulars
|
Sajeev
|
Rajeev
|
Date
|
Particulars
|
Sajeev
|
Rajeev
|
|
|
To Drawings
To Interest on Drawings
To Balance c/d
|
3000
75
21925
|
1000
25
16975
|
|
By balance b/d
By Interest on capital
By Salary
By commission
By P&L Appropriation a/c
(Profit)
|
10000
1800
6000
7200
|
8000
1200
4000
4800
|
|
25000
|
18000
|
25000
|
18000
|
||||
|
|
|
|
|
When
capital Fluctuates
Partner’s
Capital Account
Dr Cr
|
Date
|
Particulars
|
Sajeev
|
Rajeev
|
Date
|
Particulars
|
Sajeev
|
Rajeev
|
|
|
To Drawings
To Interest on Drawings
To Balance c/d
|
3000
75
41925
|
1000
25
28975
|
|
By balance b/d
By Interest on capital
By Salary
By commission
By P&L Appropriation a/c
(Profit)
|
30000
1800
6000
7200
|
20000
1200
4000
4800
|
|
45000
|
30000
|
45000
|
30000
|
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