Lokesh and Azad are Partners Sharing Profits in the Ratio 3:2, With Capitals of Rs 50,000 and Rs 30,000, Respectively-Accountancy

Lokesh and Azad are partners sharing profits in the ratio 3:2, with capitals of Rs 50,000 and Rs 30,000, respectively. Interest on capital is agreed to be paid @ 6% p.a. Azad is allowed a salary of Rs 2,500 p.a. During 2016, the profits prior to the calculation of interest on capital but after charging Azad’s salary amounted to Rs 12,500. A provision of 5% of profits is to be made in respect of manager’s commission. Prepare accounts showing the allocation of profits and partner’s capital accounts.

Profit and loss Adjustment Account

particulars		Amount	particulars	Amount
To partners Salary Azad		2,500	By profit and loss (12,500+2,500)	15,000
To Interest on capital
Lokes	3,000
Azad	1,800	4,800
Provision for Managers capital		750
Profit transfered to partners capital
Lokes	4,170
Azad	2,780	6,950
		15,000		15,000

Partners capital Account

Particulars	Lokes	Azad	Particulars	Lokes	Azad
			By Balance b/d	50,000	30,000
			By Interest on capital	3,000	1,800
			By partners Salary		2,500
To Balance c/d	57,170	37,080	By profit and loss Appropriation A/c	4,170	2,780
	57,170	37,080		57,170	37,080

Profit transferred to Lokesh’s capital Rs.4,170 and Azad’s capital Rs.2,780 

Chapter-2 Partnership Basic: Accounts

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