Question

$X$ and $Y$ are partners sharing profits and losses in the ratio of $7:3$. Their Capital Accounts as at 1st April, 2017 stood at $X-Rs.5,00,000;Y-Rs.4,00,000$. The partners are allowed interest on capital @ $5\%$ .p.a. The drawings of the partners during the year ended 31st March, 2018 amounted to $Rs.72,000$ and $Rs.50,000$ respectively. The profit for the year before allowing interest on capital and salary to $Y$ @ $Rs.5,000$ per month amounted to $Rs.8,00,000$. $10\%$ of the divisible profit is to be set aside as General Reserve.
Prepare an account showing the allocation of profits, Partners' Capital and Current Accounts.

Answer 1

PROFIT AND LOSS APPROPRIATION ACCOUNT FOR THE YEAR 2017

Particulars	Amount	Particulars	Amount
To interest on capital X-5,00,000*5% Y-4,00,000*5%	45,000	By net profit	8,00,000
To Y's salary A/c (5000*12)	60,000
To General Reserve A/c (8,00,000-45,000-60,000)*10%	69,500
To profit transferred to X's current A/c-4,37,850 Y's current A/c-1,87,650	6,25,500
	8,00,000		8,00,000

PARTNER'S CAPITAL ACCOUNT

Particulars	X	Y	Particulars	X	Y
To bal c/d	5,00,000	4,00,000	By bal b/d	5,00,000	4,00,000
Total	5,00,000	4,00,000	Total	5,00,000	4,00,000

PARTNERS CURRENT ACCOUNT

Particulars	X	Y	Particulars	X	Y
To Drawings	72,000	50,000	By Interest on Capital A/c	25,000	20,000
			BY Y's salary A/c		60,000
To bal c/d	3,90,850	2,17,650	By P&L App. A/c	4,37,850	1,87,650
Total	4,62,850	2,67,650	Total	4,62,850	2,67,60