Preparation of Capital Accounts:
Illustration :
Show how the following items will appear in the capital accounts of the partners, Anbu and Balu.
When their capitals are a) fixed and b) fluctuating.
| Anbu | Balu | |
| Capital on 1.4.2004 | 90,000 | 70,000 |
| Drawings during 2004 – 2005 | 12,000 | 9,000 |
| Interest on drawings | 360 | 270 |
| Interest on capital | 5,400 | 4,200 |
| Partner’s salary | 12,000 | — |
| Commission | — | 6,000 |
| Share of profit for 2004-05 | 6,000 | 4,000 |
Solution:
a) When capital accounts are fixed:
Capital Accounts
Dr. Cr.
| Date | Particulars | Anbu
Rs. |
Balu
Rs. |
Date | Particulars | Anbu
Rs. |
Balu Rs. |
| 2005 Mar 31 |
To Balance c/d | 90,000 | 70,000 |
2004 Apr 1 |
By Balance b/d | 90,000 | 70,000 |
| 90,000 | 70,000 | 90,000 | 70,000 | ||||
| 2005 Apr 1 |
By Balance b/d | 90,000 | 70,000 |
Dr Current Accounts Cr
|
Date |
Particulars | Anbu Rs. |
Balu Rs. |
Date | Particulars | Anbu Rs. |
Balu |
|
2005 |
2005 | ||||||
|
Mar 31 |
To Drawings To Interest on |
12,000 |
9,000 |
Mar 31 |
By Interest on capital |
5,400 |
4,200 |
| drawings |
360 |
270 |
“ |
By Partners’ | |||
|
“ |
To Balance | salary |
12,000 |
— |
|||
| c/d |
11,040 |
4,930 |
“ |
By Commission |
— |
6,000 |
|
| “ | By Profit & | ||||||
| Loss A/c |
6,000 |
4,000 |
|||||
| 23,400 |
14,200 |
23,400 |
14,200 |
||||
| 2005 | |||||||
| Apr 1 | By Balance | ||||||
| b/d |
11,040 |
4,930 |
b) When capital accounts are fluctuating:
Dr. Capital Accounts Cr.
| Date | Particulars | Anbu Rs. |
Balu Rs. |
Date | Particulars | Anbu Rs. |
Balu |
|
2005 |
2004 |
||||||
|
Mar 31 |
To Drawings |
12,000 |
9,000 |
Apr 1 |
By Balance b/d |
90,000 |
70,000 |
|
“ |
To Interest on drawings |
360 |
270 |
2005 Mar31 |
By Interest on capital |
5,400 |
4,200 |
|
“ |
To Balance c/d |
1,01,040 |
74,930 |
“ |
By Salary |
12,000 |
— |
|
“ |
By Commission |
— |
6,000 |
||||
|
“ |
By Profit & Loss A/c |
6,000 |
4,000 |
||||
|
1,13,400 |
84,200 |
1,13,400 |
84,200 |
||||
|
2005 Apr 1 |
By Balance b/d |
1,01,040 |
74,930 |
||||
Illustration :
Write up the capital and current accounts of the partners, Kala and Mala from the following and show how these will appear in the Balance Sheet.
|
Kala |
Mala |
|
| Capital on 1.4.2004 |
1,50,000 |
1,00,000 |
| Current accounts on 1.4.2004 (Cr.) |
20,000 |
15,000 |
| Drawings during 2004 — 2005 |
30,000 |
40,000 |
| Interest on drawings |
900 |
1,000 |
| Share of profit for 2004 — 2005 |
10,000 |
8,000 |
| Interest on capital |
6% |
6% |
| Solution: |
Dr . Capital Accounts Cr.
|
Date |
Particulars | Kala Rs. |
Mala Rs. |
Date | Particulars | Kala Rs. |
Mala |
| 2005 | 2004 | ||||||
| Mar 31 | To Balance b/d |
1,50,000 |
1,00,000 |
Apr 1 | By Balance b/d |
1,50,000 |
1,00,000 |
|
1,50,000 |
1,00,000 |
1,50,000 |
1,00,000 |
||||
|
|
|
2005
Apr 1 |
By Balance b/d |
1,50,000 |
1,00,000 | ||
|
|
|
||||||
Dr. Current Accounts Cr.
|
Date |
Particulars | Kala Rs. |
Mala Rs. |
Date | Particulars | Kala Rs. |
Mala Rs. |
|
2005 |
2004 | ||||||
|
Mar 31 |
To Drawings |
30,000 |
40,000 |
Apr 1 | By Balance | ||
|
“ |
To Interest | b/d |
20,000 |
15,000 |
|||
| on drawings |
900 |
1,000 |
2005 |
By Interest on | |||
|
“ |
To Balance |
Mar 31 |
capital |
9,000 |
6,000 |
||
| c/d |
8,100 |
“ |
By Profit & | ||||
| Loss A/c |
10,000 |
8,000 |
|||||
|
“ |
By Balance c/d |
12,000 |
|||||
|
39,000 |
41,000 |
39,000 |
41,000 |
||||
|
2005 |
|
2005 |
|||||
|
Apr 1 |
To Balance b/d | 12,000 | Apr 1 | By Balance b/d |
8,100 |
Balance Sheet of Kala and Mala as on 31.12.2004
|
Liabilities |
Rs. | Assets |
Rs. |
| Capital Accounts: | Current Account: | ||
| Kala 1,50,000 | Mala |
12,000 |
|
| Mala 1,00,000 |
2,50,000 |
||
| Current Account: | |||
| Kala |
8,100 |