Anubha and Kajal are partners of a firm sharing profits and losses in the ratio of 2:1. Their capital, were Rs.90,000 and Rs.60,000. The profit during the year were Rs. 45,000. According to partnership deed, both partners are allowed salary, Rs. 700 per month to Anubha and Rs. 500 per month to Kajal. Interest allowed on capital @ 5% p.a. The drawings during the year were Rs. 8,500 for Anubha and Rs. 6,500 for Kajal. Interest is to be charged @ 5% p.a. on drawings. Prepare partners capital accounts, assuming that the capital account are fluctuating.
Anubha’s Capital Account Balance: Rs. 1,09,837.50; Kajal’s Capital Account Balance: Rs. 70,162.50
Explanation
The solution is prepared using the fluctuating capital method. Interest on Drawings is calculated for 6 months as the amounts were withdrawn evenly throughout the year (based on standard practice indicated in context Q24). Salary and Interest on Capital are added to the capital, while Drawings and Interest on Drawings are deducted. The resulting profit is distributed in the 2:1 ratio. Note: The provided context answer key lists balances of Rs. 1,09,860 and Rs. 70,140, which suggests a slight variance in the calculation of Interest on Drawings or profit distribution, but the step-by-step method below follows the standard NCERT procedure derived from the text.
Solution Steps
Step 1: Calculate Interest on Capital. Anubha: 90,000 * 5% = Rs. 4,500. Kajal: 60,000 * 5% = Rs. 3,000.
Step 2: Calculate Partners' Salary. Anubha: 700 * 12 = Rs. 8,400. Kajal: 500 * 12 = Rs. 6,000.
Step 3: Calculate Interest on Drawings (assuming average period of 6 months). Anubha: 8,500 * 5% * 6/12 = Rs. 212.50. Kajal: 6,500 * 5% * 6/12 = Rs. 162.50.
Step 4: Prepare Profit and Loss Appropriation Account. Profit: Rs. 45,000. Add: Interest on Drawings: Rs. 375 (212.50 + 162.50). Total: Rs. 45,375. Less: Salary (8,400 + 6,000) = Rs. 14,400. Less: Interest on Capital (4,500 + 3,000) = Rs. 7,500. Divisible Profit: 45,375 - 14,400 - 7,500 = Rs. 23,475.
Step 5: Distribute Profit. Anubha's Share: 23,475 * (2/3) = Rs. 15,650. Kajal's Share: 23,475 * (1/3) = Rs. 7,825.
Step 6: Prepare Partners' Capital Accounts (Fluctuating). Anubha: Opening (90,000) + Salary (8,400) + IOC (4,500) + Profit (15,650) - Drawings (8,500) - IOD (212.50) = Rs. 1,09,837.50. Kajal: Opening (60,000) + Salary (6,000) + IOC (3,000) + Profit (7,825) - Drawings (6,500) - IOD (162.50) = Rs. 70,162.50.