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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Ashish and Aakash are partners sharing profits in the ratio of 3 : 2. Their Capital Accounts showed credit balances of ₹5,00,000 and ₹6,00,000 respectively as on 31st March, 2025 after the debit of drawings during the year of ₹1,50,000 and ₹1,00,000 respectively. Net profit for the year ended 31st March, 2025 was ₹5,00,000. Interest on capital is to be allowed @ 10% p.a. Pass the Journal entry for interest on capital and prepare the Profit & Loss Appropriation Account.
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2025 Mar 31 | Profit & Loss Appropriation A/c Dr. | 1,35,000 | ||
| To Ashish’s Capital A/c | 65,000 | |||
| To Aakash’s Capital A/c | 70,000 | |||
| (Interest on capital transferred to Profit & Loss Appropriation A/c) |
Profit & Loss Appropriation Account (for the year ended 31st March, 2025)
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Interest on Capital: | By Profit & Loss A/c (Net Profit) | 5,00,000 | |
| Ashish’s Capital A/c | 65,000 | ||
| Aakash’s Capital A/c | 70,000 | ||
| To Profit transferred to Capital A/cs: | |||
| Ashish (3,65,000 × 3/5) | 2,19,000 | ||
| Aakash (3,65,000 × 2/5) | 1,46,000 | ||
| Total | 5,00,000 | Total | 5,00,000 |
Working Notes:
Opening capital = Closing capital + Drawings: Ashish = ₹5,00,000 + ₹1,50,000 = ₹6,50,000; Aakash = ₹6,00,000 + ₹1,00,000 = ₹7,00,000.
Interest on capital @ 10%: Ashish = ₹65,000; Aakash = ₹70,000.
Divisible profit = ₹5,00,000 – ₹1,35,000 = ₹3,65,000, shared in 3 : 2.
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Chapter 1 Q.24 - Accounting for Partnership Firm Fundamentals", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 1 - Accounting for Partnership Firm – Fundamentals.
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