Solved Question on Preparation of Capital a/c in Partnership

Solved Question on Preparation of Capital a/c in Partnership

Ajith and Sajith were partners with capitals of Rs.1000000 and Rs.750000respectively. they agree to share profits in the ratio of 3:2. Show how the following transactions will be recorded in the capital accounts of the partners in both the cases when a) the capital are fixed and b) the capitals are fluctuating. The books are closed on December 31 every year.

Particulars	Ajith	Sajith
Interest on Capital Drawing (During 2010) Interest on Drawings Salary Commission Share in loss for the year 2010	5% 22500 1350 15000 7500 45000	5% 15000 900 5250 30000

Solution – Under Fixed Capital Method.

Partner’s Capital Account

Dr                                                                                                                                                Cr

Date	Particulars	Ajith	Sajith	Date	Particulars	Ajith	Sajith
	To Balance c/d	1000000	750000		By Balance b/d	1000000	750000
		1000000	750000			1000000	750000

Partner’s Current Account

Dr                                                                                                                                                Cr

Date	Particulars	Ajith	Sajith	Date	Particulars	Ajith	Sajith
	To Drawings To Interest on Drawings To Profit & loss Appropriation (loss) To Balance c/d	22500 1350 45000 3650	15000 900 30000 -------		By Interest on capital By Salary By Commission By Balance  c/d	50000 15000 7500	37500 ------- 5250 3150
		72500	45900			72500	45900

Solution – Under Fluctuating Capital Method

Partner’s Capital Account

Dr                                                                                                                                                Cr

Date	Particulars	Ajith	Sajith	Date	Particulars	Ajith	Sajith
	To Drawings To Interest on Drawings To Profit & loss Appropriation (loss) To Balance c/d	22500 1350 45000 3650	15000 900 30000 -------		By Balance b/d By Interest on capital By Salary By Commission By Balance  c/d	1000000 50000 15000 7500	750000 37500 ------- 5250 3150
		1072500	795900			1072500	795900