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.

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Solution

## PROFIT AND LOSS APPROPRIATION ACCOUNT FOR THE YEAR 2017 Particulars Amount Particulars AmountTo interest on capitalX-5,00,000*5%Y-4,00,000*5% 45,000By net profit 8,00,000To 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 toX's current A/c-4,37,850Y'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 5,00,0004,00,000 PARTNERS CURRENT ACCOUNT Particulars X Y ParticularsX YTo Drawings 72,00050,000 By Interest on Capital A/c 25,00020,000 BY Y's salary A/c 60,000To bal c/d 3,90,850 2,17,650 By P&L App. A/c 4,37,8501,87,650 Total 4,62,850 2,67,650 Total 4,62,850 2,67,60

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