PARTNERSHIP ACCOUNTS - Profit & Loss Appropriation account

PARTNERSHIP ACCOUNTS - Profit & Loss Appropriation Account

1. Ms. K. KALAI SELVI
Assistant Professor of Commerce
PG & Research Department of Commerce
Bon Secours College for Women, Thanjavur

2. P & L Appropriation
Account

3. Specimen of Profit & Loss Appropriation A/c

4. Sum No.17

5. (Answer for Sum No.17)
Profit & Loss Appropriation A/c
Date Particulars
Amount
Rs.
Date Particulars
Amount
Rs.
31.12.2008




31.12.2008

31.12.2008
To Interest on Capital:
A’s Capital Account 1,800
B’s Capital Account 600
-----

,, B’s Salary


,, Transfer of Profit
A’s Capital A/c
(6750 / 2) 3375
B’s Capital A/c
(6750 / 2) 3375
--------



2,400

3,000






6,750
31.12.2008


31.12.2008
By P & L A/c
Net Profit b/d

,, Interest on Drawings:
A 100
B 50
-----





12,000




150
12,150 12,150


Working Notes:
Interest on Capital (A) = Rs.30,000 x 6/100 = Rs. 1,800
Interest on Capital ( B) = Rs.10,000 x 6/100 = Rs. 600

6. Capital Accounts
Date Particulars
A’s
Capital

B’s
Capital

Date Particulars
A’s
Capital

B’s
Capital

31.12.2008
31.12.2008
31.12.2008
To Drawings
,, Interest on Drawings
,, Balance c/d

3,000
100
32,075
2,000
50
14,925
01.01.2008
31.12.2008
31.12.2008
31.12.2008
By Balance b/d
,, Interest on Capital
,, B’s Salary
,, Transfer of Profit

30,000
1,800
-
3,375
10,000
600
3,000
3,375
35,175 16,975 35,175 16,975
01.01.2009 By Balance b/d 32,075 14,925

7. Sum No.18

8. (Answer for Sum No.18)
Profit & Loss Appropriation A/c
Date Particulars
Amount
Rs.
Date Particulars
Amount
Rs.
31.12.2008




31.12.2008

31.12.2008
To Interest on Capital:
Ajay’s Capital A/c 3,000
(50,000 x 6 /100 )
Vijay’s Capital A/c 1,800
(30,000 x 6 /100 ) -----

,, Vijay’s Salary


,, Transfer of Profit
Ajay’s Capital A/c
(5,200 x 3 / 5) 3,120
Vijay’s Capital A/c
5,200 x 2 / 5) 2,080
--------




4,800

2,500






5,200

31.12.2008


31.12.2008
By P & L A/c
Net Profit b/d






12,500





12,500 12,500

9. Capital Accounts
Date Particulars
Ajay’s
Capital

Vijay’s
Capital

Date Particulars
Ajay’s
Capital

Vijay’s
Capital

31.12.2008 To Balance c/d

56,120 36,380 01.01.2008
31.12.2008
31.12.2008
31.12.2008
By Balance b/d
,, Interest on Capital
,, Salary
,, Transfer of Profit

50,000
3,000
-
3,120
30,000
1,800
2,500
2,080
56,120 36,380 56,120 36,380
01.01.2009 By Balance b/d 56,120 36,380

10. Sum No.19

11. (Answer for Sum No.19)
Profit & Loss Appropriation A/c
Date Particulars
Amount
Rs.
Date Particulars
Amount
Rs.
31.12.2008





31.12.2008
To Interest on Capital:
A’s Capital A/c 10,000
(2,00,000 x 5 /100 )
B’s Capital A/c 5,000
(1,00,000 x 5 /100 ) ------- -----



,, Transfer of Profit
A’s Capital A/c 40,000
(80,000 / 2 )
B’s Capital A/c 40,000
(80,000 / 2 ) ------------





15,000







80,000

31.12.2008



By P & L A/c
Net Profit b/d






95,000





95,000 95,000

12. Sum No.20

13. (Answer for Sum No.20)
Profit & Loss Appropriation A/c
Date Particulars
Amount
Rs.
Date Particulars
Amount
Rs.
31.12.2008





To Net Loss b/d
,, Interest on Capital:
Karthik 1,800
Saravanan 1,200
--------




21,216



3,000








31.12.2008





31.12.2008
,, Interest on Drawings:
Karthik 120
Saravanan 96
-----


,, Transfer of Loss:
Karthik
(24,000 x 3 / 4)
Saravanan
(24,000 x 1 / 4)




216




18,000

6,000
24,216 24,216

14. Capital Accounts
Date Particulars
Karthik’s
Capital

Saravanan’s
Capital

Date Particulars
Karthik’
s Capital

Saravanan’s
Capital

31.12.2008
31.12.2008
31.12.2008
31.12.2008
To Drawings
,, Interest on Drawings
,, Transfer of Loss
,, Balance c/d

6,000
120
18,000
13,680
4,800
96
6,000
14,304
01.01.2008
31.12.2008

By Balance b/d
,, Interest on Capital

36,000
1,800

24,000
1,200

37,800 25,200 37,800 25,200
01.01.2009 By Balance b/d 13,680 14,304

15. Sum No.21

16. (Answer for Sum No.21)
Profit & Loss Appropriation A/c
Date Particulars
Amount
Rs.
Date Particulars
Amount
Rs.
31.12.2008




31.12.2008

31.12.2008

To Interest on Capital:
Amar 6,000
Akbar 4,500
---------

,, Salary to Akbar

,, Transfer of Profit
Amar 17,820
Akbar 11,880
----------



10,500

24,000




29,700
31.12.2008


31.12.2008
By P & L A/c
Net Profit b/d

,, Interest on Drawings:
Amar 420
Akbar 300
-----





63,480




720
64,200 64,200

Workings:
Calculation of Interest on Capital:
Amar = 1,20,000 x 5 /100 = 6,000 Akbar = 90,000 x 5 /100 = 4,500
Calculation of Profit Share:
Amar = 29,700 x 3 / 5 = 17,820 Akbar = 29,700 x 2 / 5 = 11,880

17. Capital Accounts
Date Particulars
Amar’s
Capital

Akbar’s
Capital

Date Particulars
Amar’s
Capital

Akbar’s
Capital

31.12.2008
,,
,,
To Drawings
,, Interest on Drawings

,, Balance c/d
18,000
420

1,25,400
36,000
300

94,080
01.01.2008
31.12.2008
31.12.2008
31.12.2008
By Balance b/d
,, Salary
,, Interest on Capital
,, Transfer of Profit

1,20,000
-
6,000
17,820
90,000
24,000
4,500
11,880
1,43,820 1,30,380 1,43,820 1,30,380
01.01.2009 By Balance b/d 1,25,400 94,080

18. Sum No.22

19. (Answer for Sum No.22)
Profit & Loss Appropriation A/c
Date Particulars
Amount
Rs.
Date Particulars
Amount
Rs.
31.12.2008




31.12.2008

31.12.2008

To Interest on Capital:
Kavitha 4,000
Sumathi 3,000
---------

,, Sumathi’s Capital a/c
(Salary)

,, Transfer of Profit
Kavitha 11,880
Sumathi 7,920
----------



7,000

16,000




19,800
31.12.2008


31.12.2008
By P & L A/c
Net Profit b/d

,, Interest on Drawings:
Kavitha 280
Sumathi 200
-----





42,320




480
42,800 42,800
Workings:
Calculation of Interest on Capital:
Kavitha = 80,000 x 5 /100 = 4,000 Sumathi = 60,000 x 5 /100 = 3,000
Calculation of Profit Share:
Kavitha = 19,800 x 3 / 5 = 11,880 Sumathi = 19,800 x 2 / 5 = 7,920

20. Capital Accounts
Date Particulars
Kavitha’s
Capital

Sumathi’s
Capital

Date Particulars
Kavitha’s
Capital

Sumathi’s
Capital

31.12.2008
,,
,,
To Drawings
,, Interest on
Drawings

,, Balance c/d
12,000

280

83,600
24,000

200

62,720
01.01.2008
31.12.2008
31.12.2008
31.12.2008
By Balance b/d
,, Salary
,, Interest on Capital
,, Transfer of Profit

80,000
-
4,000
11,880
60,000
16,000
3,000
7,920
95,880 86,920 95,880 86,920
01.01.2009 By Balance b/d 83,600 62,720

21. Sum No.23

22. (Answer for Sum No.23)
Working Notes:
(i) Calculation of Interest on Drawings :
Calculation of average period = 11 months + 0 months = 11 months
Calculation of average period = 11 / 2
= 5.5 months
Interest on Drawings (Suriyan) = Rs.24,000 x 6/100 x 5.5/12 = Rs. 660
Profit & Loss Appropriation A/c
Date Particulars
Amount
Rs.
Date Particulars
Amount
Rs.
31.12.2008





To Transfer of Profit:
Chandran Capital A/c
Surian Capital A/c




25,546.50
23,113.50
31.12.2008


31.12.2008
By P & L A/c
Net Profit b/d

,, Interest on Drawings
Surian





48,000.00


660.00

48,660.00 48,660.00

23. Working Notes:
(ii) Calculation of Profit Sharing :
Up to 30.09.2008 Partners shared their profit equally
From 01.10.2008 onwards they agree to share their profit 3:2
(Hence we have to distribute the first 9 months profit in equal ratio and the remaining 3 months profit in 3:2 ratio)
Particulars Ratio
Chandran

Surian

Profit for first 9 months :
( Rs.48,660 x 9/12 ) = 36,495

[36,495 / 2 = Rs.18,247.50]

Profit for remaining 3 months:
( Rs. 48,660 x 3/12 ) = 12,165

[ 12,165 x 3/ 5 = 7,299
12,165 x 2/ 5 = 4,866]






Equal





3:2




18,247.50





7,299





18,247.50





4,866
25,546.50 23,113.5

24. Capital Accounts
Date Particulars
Chandran’s
Capital

Surian’s
Capital

Date Particulars
Chandran’s
Capital

Surian’s
Capital

31.12.2008
31.12.2008
31.12.2008
To Drawings
,, Interest on Drawings
,, Balance c/d

-
-
3,25,546.50


24,000.00
660.00
1,98,453.50


01.01.2008
30.09.2008
31.12.2008
31.12.2008
By Balance b/d
,, Additional Capital
,, Transfer of Profit

2,00,000.00
1,00,000.00
25,546.50

2,00,000.00
-
23,113.50

3,25,546.50 2,23,113.50 3,25,546.50 2,23,113.50
01.01.2009 By Balance b/d 3,25,546.50 1,98,453.50