# Q. X and Y are partners in a firm. Their capitals as on April 1, 1996 Rs. 2,50,000 and Rs. 1,80,000 respectively. They share profits equally, On Octorber1, 1996 , they decided that their capitals should be Rs. 2,00,000 each. The necessary adjustments in the capitals were made by withdrawing or introducing cash, According to the partnership deed, interest on capital is to be allowed at 8% p.a. X is to get an annual salary of Rs. 4,000 and Y is allowed a monthly salary of Rs. 1,000. It was found that Y was regularly withdrawing his monthly salary. The manager of the firm is entitled to a commission of 10% of the profit before any adjustment is made according to the partnership deed. Net profit for the year ended on 31st March, 1997, before charging interest on capital and salary was Rs. 80,000. Prepare the profit and loss appropriation account, partner's capital account and current accounts.

Dear Student

 Profit and Loss Appropriation A/c Date Particulars Amount Date Particulars Amount (Rs) (Rs) Salary : Net profit 72,000 X 4,000 (After manager's commission of Rs 8,000 (80,000 x 10%) Y 12,000 16,000 Interest on Capital : X 18,000 Y 11,200 29,200 Profit Transferred : X 13,400 Y 13,400 26,800 72,000 72,000

 Partner's Capital A/c (Fixed Capital) Particulars X Y Particulars X Y Balance b/d 250,000 80,000 Withdrawal of Capital 50,000 Additional Capital 120,000 Bal C/d 200,000 200,000 250,000 200,000 250,000 200,000

 Partner's Current A/c Particulars X Y Particulars X Y Balance b/d 0 0 Salary 4,000 12,000 Drawings - 12,000 Interest on Capital 18,000 11,200 Profit and loss Appropriation 13,400 13,400 Bal C/d / (Debit balance) 35,400 24,600 35,400 36,600 35,400 36,600

 Calculation of Interest on Capital - X Date Amount Introduced / (Withdrawn) No. of Months to 31-3-97 Interest @ 8% 1-Apr-96 250,000 12 20,000 1-Oct-96 (50,000) 6 (2,000) Total 200,000 18,000

 Calculation of Interest on Capital - Y Date Amount Introduced / (Withdrawn) No. of Months to 31-3-97 Interest @ 8% 1-Apr-96 80,000 12 6,400 1-Oct-96 120,000 6 4,800 Total 200,000 11,200

Regards

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