Ramesh and Suresh Were Partners in a Firm Sharing Profits in the Ratio of their Capitals Contributed On Commencement of Business - Bzziii.com

Ramesh and Suresh were partners in a firm sharing profits in the ratio of their capitals contributed on commencement of business which were Rs 80,000 and Rs 60,000 respectively. The firm started business on April 1, 2016. According to the partnership agreement, interest on capital and drawings are 12% and 10% p.a., respectively. Ramesh and Suresh are to get a monthly salary of Rs 2,000 and Rs 3,000, respectively.

The profits for year ended March 31, 2017 before making above appropriations was Rs 1,00,300. The drawings of Ramesh and Suresh were Rs 40,000 and Rs 50,000, respectively. Interest on drawings amounted to Rs 2,000 for Ramesh and Rs 2,500 for Suresh. Prepare Profit and Loss Appropriation Account and partners’ capital accounts, assuming that their capitals are fluctuating.

Profit and Loss Appropriation Account

Particulars		Amount (Rs.)	Particulars		Amount (Rs.)
To Interest on Capital			By Profit and loss A/c		1,00,300
To Ramesh	9,600		By Interest on Drawings
To Suresh	7,200	16,800	Ramesh	2,000
To Partner’s salary			Suresh	2,500	4,500
To Ramesh	24,000
To Suresh	36,000	60,000
To Profit transfered tp partner’s capital A/c
Ramesh	16,000
Suresh	12,000	28,000
	1,04,800			1,04,800

Partners capital Account

Particulars	Ramesh	Suresh	Particulars	Ramesh	Suresh
To Drawings	40,000	50,000	By Cash	80,000	60,000
To Interest on Drawings	2,000	2,500	By Interest on capital	9,600	7,200
To Balance c/d	87,600	62,700	By Salary	24,000	36,000
			By Profit and loss appropriation A/c	16,000	12,000
	1,29,600	1,15,200		1,29,600	1,15,200

Chapter-2 Partnership Basic: Accounts

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