Question

$X$ and $Y$ are partners sharing profits and losses in the ratio of $2:3$ with capitals of $Rs.2,00,000$ and $Rs.1,00,000$ respectively. Pass the necessary Journal entry or entries for distribution of profit/loss for the year ended 31st March, 2018 in each of the alternative cases:
Case 1. If Partnership Deed is silent as to the interest on capital and the profit for the year is $Rs.20,000$.
Case 2. If Partnership Deed provides for interest on capital @ $6\%$ p.a. and loss for the year is $Rs.15,000$.
Case 3. If Partnership Deed provides for-interest on capital @ $6\%$ p.a. and the profit for the year is $Rs.21,000$.
Case 4. If Partnership Deed provides for interest on capital @ $6\%$ p.a. as a charge on profit and the profit for the year is $Rs.20,000$.
Case 5. If Partnership Deed provides for interest on capital @ $6\%$ p.a. as a charge on profit and the profit for the year is $Rs.2,000$.
Case 6. If Partnership Deed provides for interest on capital @ $6\%$ p.a. as a charge on profit and the profit for the year is $Rs.18,000$.

Answer 1

Journal Entries

Case 1- Profit and Loss A/c Dr. 20,000

To Profit and Loss Appropriation A/c 20,000

(Being profit transferred to p &L app Account)

Profit and loss Appropriation A/c Dr 20,000

To X's capital A/c 8000

To Y's capital A/c 12,000

(Being profit distributed among partners)

Case 2- Profit and loss A/c Dr. 15000

To Profit and Loss Apprpriation A/c 15000

(Being loss transferred to P&L A/c)

X's capital A/c Dr. 6,000

Y's capital A/c Dr. 9000

To profit and loss A/c 15,000

(Being the loss distributed among partners)

No interest on capital is allowed in case of loss.

Case 3- Profit and loss A/c Dr. 21,000

To profit and loss Appropriation A/c 21,000

(Being profit transferred to P&L app account)

Profit and loss appropriation A/c Dr. 18,000

To X's capital A/c 12,000

To Y's capital A/c 6000

(Being interest on capital allowed to partners)

Profit and loss Appropriation A/c Dr. 3000

To X's capital A/c 1200

To Y's capital A/c 1800

(Being the profit distributed among partners)

Case 4- Profit and loss A/c Dr. 20000

To profit and loss Appropriation A/c 20000

(Being the net profit transferred to p&l app account)

Profit and loss Appropriation A/c Dr. 2000

To X's capital A/c 800

To Y's capital A/c 1200

(Being profit distributed among partners)

Profit and loss A/c Dr. 18,000

To X's capital A/c 12,000

To Y's capital A/c 6000

(Being interest allowed)

Case 5- Profit and loss A/c Dr. 18,000

To X's capital A/c 12,000

To Y's capital A/c 6000

(Being interest charged from profit)

X's capital A/c Dr. 6400

Y's capital A/c Dr. 9600

To Profit and loss A/c (18000-2000) 16000

(Being loss transferred to partners account)

Case 6- Profit and loss A/c Dr. 18,000

To X's capital A/c 12,000

To Y's capital A/c 6000

(Being interest allowed to partners)