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Date  Amount Introduced / (Withdrawn)   No. of Months to 31-3-97   Interest @ 8% 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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