Question

Show how the following will be recorded in the Capital Accounts of the Partners Sohan and Mohan when their capitals are fluctuating:

	Sohan(₹)	Mohan(₹)
Capital on 1st April, 2017	4,00,000	3,00,000
Drawings during 2017 –18	50,000	30,000
Interest on Capital	5%	5%
Interest on Drawings	1,250	750
Share of Profit for 2017–18	60,000	50,000
Partner's Salary	36,000	.....
Commission	5,000	3,000

Answer 1

Partners’ Capital Accounts
Dr.				Cr.
Particulars	Sohan	Mohan	Particulars		Sohan	Mohan
Drawings A/c	50,000	30,000	Balance b/d		4,00,000	3,00,000
Interest on Drawings A/c	1,250	750	Interest on Capital A/c		20,000	15,000
			P&L Appropriation A/c		60,000	50,000
Balance c/d	4,69,750	3,37,250	Partners’ Salary		36,000	-
			Commission		5,000	3,000
	5,21,000	3,68,000			5,21,000	3,68,000

Working Note:

Calculation of Interest on Capital