Question

Sajal and Kajal are partners sharing profits and losses in the ratio of 2 : 1. On 1 st April, 2017 their Capitals were: Sajal Rs. 50,000 and Kajal Rs. 40,000.
Prepare Profit and Loss Appropriation Account and the Partners' Capital Accounts at the end of the year after considering the following items:
(a) Interest on Capital is to be allowed @ 5% p.a.
(b) Interest on the loan advanced by Kajal for the whole year, the amount of loan being Rs. 30,000.
(c) Interest on partners' drawings @ 6% p.a. Drawings: Sajal Rs. 10,000 and Kajal Rs. 8,000.
(d) 10% of the divisible profit is to be transferred to Reserve. The net profit for the year ended 31st March, 2018 Rs. 68,460.

Answer 1

PROFIT AND LOSS APPROPRIATION A/C

(for the year ended 31st March, 2018)
Dr. Cr.

Particulars	Amount	Particulars	Amount
To Interest on capital a/c - Sajal - Kajal	2500 2000	By Profit and loss a/c	68460
To Reserve a/c (68460+300+240-2500-2000) *10/100	6450	By interest on drawings a/c - Sajal - Kajal	300 240
To Profit transferred to: - Sajal's Capital a/c - Kajal's Capital a/c	38700 19350
	69000		69000

Note: interest on loan has already been deducted before to give the net profit.

PARTNER'S CAPITAL A/C
Dr. Cr.

Particulars	Sajal	Kajal	Particulars	Sajal	Kajal
To Drawings a/c	10000	8000	By Balance b/d	50000	40000
To interest on drawings a/c	300	240	By interest on capital a/c	2500	2000
To Balance c/d	80900	53110	By Profit and loss appropriation a/c	38700	19350
	91200	61350		91200	61350