Question

Simmi and Sonu are partners in a firm, sharing profits and losses in the ratio of 3:1. The profit and loss account of the firm for the year ending March 31,2006 shows a net profit of Rs 1,50,000. Prepare the profit and loss appropriation account by taking into consideration the following information

(i) Partners capital on April 1, 2005; Simmi, Rs 30,000; Sonu, Rs 60,000;

(ii) Current accounts balances on April 1, 2005; Simmi, Rs 30,000 (Cr); Sonu, Rs 15,000 (Cr);

(iii) Partners drawings during the year amounted to Simmi, Rs 20,000; Sonu, Rs 15,000;

(iv) Interest on capital was allowed at 5% pa.

(v) Interest on drawing was to be charged at 6% pa at an average of six months;

(vi) Partners' Salaries; Simmi Rs 12,000 and Sonu Rs 9,000. Also show the partners' current accounts.

Answer 1

$\begin{array}{cccccccc}\text{Dr}& & & & \text{Profit and Loss Appropriation Account}& & & \text{Cr}\end{array}\begin{array}{cccc}\text{Particulars}& \text{Amt.(Rs)}& \text{Particulars}& \text{Amt. (Rs)}\\ \text{Interest on Capital}& & \text{Profit and Loss}& 1,50,000\\ \text{Simmi's Current A/c}1,500& & \text{Interest on Drawings}& \\ \text{Sonu's Current A/c}\underset{–}{3,000}& 4,500& \text{Simmi's Current A/c}600& \\ \text{Partner's Salary}& & \text{Sonu's Current A/c}\underset{–}{450}& 1,050\\ \text{Simmi's Current A/c}12,000& & \text{(Charged for 6 Months)}& \\ \text{Sonu's Current A/c}\underset{–}{9,000}& 21,000& & \\ \text{Profit Transferred to}& & & \\ \text{Simmi's Current A/c}94,162& & & \\ \text{Sonu's Current A/c}\underset{–}{31,388}& \underset{–}{1,25,550}& & \\ & \underset{–}{1,15,050}& & \overline{\underset{–}{1,51,050}}\end{array}$

$\begin{array}{ccccccccc}\text{Dr}& & & & \text{Partners' Capital Account (Fixed)}& & & & \text{Cr}\end{array}$
$\begin{array}{cccccc}\text{Particulars}& \text{Simmi}& \text{Sonu}& \text{Particulars}& \text{Simmi}& \text{Sonu}\\ & & & \text{Balance b/d}& 30,000& 60,000\\ \text{Balance c/d}& \underset{–}{\overline{30,000}}& \underset{–}{\overline{60,000}}& & \underset{–}{\overline{30,000}}& \underset{–}{\overline{60,000}}\end{array}$

$\begin{array}{cccccccccccccccc}\text{Dr}& & & & & & \text{Partners' Current Account (Fixed)}& & & & & & & & & \text{Cr}\end{array}\begin{array}{cccccc}\text{Particulars}& \text{Simmi}& \text{Sonu}& \text{Particulars}& \text{Simmi}& \text{Sonu}\\ \text{Drawings}& 20,000& 15,000& \text{Balance b/d}& 30,000& 15,000\\ \text{Interest on Drawings}& 600& 450& \text{Interest on Capital}& 1,500& 3,000\\ & & & \text{Partner's Salary}& 12,000& 9,000\\ & & & \text{Profit and Loss Appropriation A/c}& 94,162& 31,388\\ \text{Balance c/d}& \underset{–}{1,17,062}& \underset{–}{42,938}& & & \\ & \underset{–}{1,37,662}& \underset{–}{58,388}& & \underset{–}{\overline{1,37,662}}& \underset{–}{\overline{58,388}}\end{array}$