Page 21 - ISCDEBK-12

Partnership Accounts—Fundamentals 1.11

Illustration 10.
Rahul, Shyam and Tarun are partners sharing profits and losses in proportion to their
capitals in the beginning of the year. They are entitled to draw annually ` 3,000; ` 2,500 and
` 2,000 respectively against their anticipated share of profit. Any drawings in excess of these
amounts are to be regarded as advances taken from the firm and are to be subject to interest
@ 18% p.a. The capitals in the beginning of the year is to be allowed interest @ 15% p.a.
The capitals of the partners in the beginning of the year were Rahul ` 40,000; Shyam
` 30,000 and Tarun ` 20,000. The credit balances of their Current Accounts were Rahul
` 1,152; Shyam ` 1,864 and Tarun ` 576. Their drawings during the year were Rahul
` 7,000; Shyam ` 9,500 and Tarun ` 3,000. Net profit for the year ended 31st March, 2019
was ` 30,420.
Prepare Profit and Loss Appropriation Account, Capital and Current Accounts of the
partners for the year ended 31st March, 2019.
Solution: PROFIT AND LOSS APPROPRIATION ACCOUNT
Dr. for the year ended 31st March, 2019 Cr.
Particulars ` Particulars `
To Interest on Capital A/cs: By Profit and Loss A/c (Net Profit) 30,420
Rahul 6,000 By Interest on Drawings A/cs (Note):
Shyam 4,500 Rahul on ` 4,000 360
Tarun 3,000 13,500 (` 7,000 – ` 3,000)
To Profit trfd. to Current A/cs: Shyam on ` 7,000 630
Rahul (4/9) 8,000 (` 9,500 – ` 2,500)
Shyam (3/9) 6,000 Tarun on ` 1,000 90 1,080
Tarun (2/9) 4,000 18,000 (` 3,000 – ` 2,000)
31,500 31,500

Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Date Particulars Rahul Shyam Tarun Date Particulars Rahul Shyam Tarun
` ` ` ` ` `
2019 2018
Mar. 31 To Balance c/d 40,000 30,000 20,000 Apr. 1 By Balance b/d 40,000 30,000 20,000
40,000 30,000 20,000 40,000 30,000 20,000

Dr. PARTNERS’ CURRENT ACCOUNTS Cr.
Date Particulars Rahul Shyam Tarun Date Particulars Rahul Shyam Tarun
` ` ` ` ` `
2019 2018
Mar. 31 To Drawings A/c 7,000 9,500 3,000 Apr. 1 By Balance b/d 1,152 1,864 576
Mar. 31 To Interest on 2019
Drawings A/c 360 630 90 Mar. 31 By Interest on
Mar. 31 To Balance c/d 7,792 2,234 4,486 Capital A/c 6,000 4,500 3,000
Mar. 31 By Profit and Loss
Appropriation A/c 8,000 6,000 4,000
15,152 12,364 7,576 15,152 12,364 7,576
Note: In the absence of actual dates of drawings, interest thereon has been calculated for the average
period, i.e., 6 months.