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2.8 Double Entry Book Keeping—CBSE XII

PROFIT AND LOSS APPROPRIATION ACCOUNT
Dr. for the year ended ... Cr.
Particulars ` Particulars `
To Reserve (10% of ` 4,38,000) 43,800 By Profit and Loss A/c (Net Profit) 4,38,000
To Profit transferred to: (` 4,50,000 – ` 12,000, interest on
Ram’s Capital A/c 1,31,400 Karim’s Loan)
Rahim’s Capital A/c 1,31,400
Karim’s Capital A/c 1,31,400 3,94,200
4,38,000 4,38,000

Illustration 3 (Fixed Capital Accounts).

Where are the following items shown when:
(a) Capital Accounts are fixed; and

(b) Capital Accounts are fluctuating.

(i) Salary to a partner,
(ii) Drawings made by a partner,

(iii) Fresh capital introduced by a partner,
(iv) Share of profit earned by a partner, and

(v) Commission payable to a partner.

Solution:

(a) When Capital Accounts are fixed
(i) Credit side of Partner’s Current Account.

(ii) Debit side of Partner’s Current Account.
(iii) Credit side of Partner’s Capital Account.

(iv) Credit side of Partner’s Current Account.

(v) Credit side of Partner’s Current Account.
(b) When Capital Accounts are fluctuating

(i) Credit side of Partner’s Capital Account.

(ii) Debit side of Partner’s Capital Account.
(iii) Credit side of Partner’s Capital Account.

(iv) Credit side of Partner’s Capital Account.
(v) Credit side of Partner’s Capital Account.