Question

Sukesh and Vanita were partners in a firm. Their partnership agreement provides that:

(i) Profits would be shared by Sukesh and Vanita in the ratio of 3:2;

(ii) 5% interest is to be allowed on capital;

(iii) Vanita should be paid a monthly salary of Rs 600.

The following balances are extracted from the books of the firm, on March 31, 2017.

	Sukesh	Verma*
	Rs	Rs
Capital Accounts	40,000	40,000
Current Accounts	(Cr.) 7,200	(Cr.) 2,800
Drawings	10,850	8,150

Net profit for the year, before charging interest on capital and after charging partner’s salary was Rs 9,500. Prepare the Profit and Loss Appropriation Account and the Partner’s Current Accounts.

Answer 1

Profit and Loss Appropriation Account
Dr.							Cr.
Particulars			Amount Rs	Particulars			Amount Rs
Interest on Capital				Profit and Loss			9,500
Sukesh		2,000
Vanita		2,000	4,000
Profit transferred to
Sukesh’s Current {5,500 × (3/5)}			3,300
Vanita’s Current {28,000 × (2/5)}			2,200
			9,500				9,500

Partner’s Capital Account
Dr.					Cr.
Particulars	Sukesh	Vanita	Particulars	Sukesh	Vanita
			Balance b/d	40,000	40,000
Balance c/d	40,000	40,000
	40,000	40,000		40,000	40,000

Partner’s Current Account
Dr.					Cr.
Particulars	Sukesh	Vanita	Particulars	Sukesh	Vanita
Drawings	10,850	8,150	Balance b/d	7,200	2,800
			Partner’s Salaries		7,200
			Profit and Loss Appropriation	3,300	2,200
Balance c/d	1,650	6,050	Interest on capital	2,000	2,000
	12,500	14,200		12,500	14,200