Partnership and LLP AccountsQ- 13 | Partnership and LLP AccountsQuestion 5202 of 108
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Akbar and Bali are partners in a firm sharing profits and losses equally. On 1st April, 2023 the balance of their Capital Accounts were: Akbar 50,000 and Bali 40,000. On that date the balances of their Current Accounts were: Akbar 10,000 (credit) and Bali 3,000 (debit). Interest @ 5% p.a. is to be allowed on the balance of Capital Accounts as on 1.4.2023. Ball is to get annual salary of 3,000 which had not been withdrawn. Drawings of Akbar and Ball during the year were 1,000 and 2,000 respectively. The profit for the year ended 31st March, 2024 before charging interest on capital but after charging Bali salary was ₹ 70,000. It is decided to transfer 10% of divisible profit to a Reserve Account. Prepare Profit & Loss Appropriation Account for the year ended 31st March, 2024 and show Capital and Current Accounts of the Partners for the year. [RTP Jan. 2025]

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Detailed Solution & Explanation

Profit and Loss Appropriation Account for the year ended 31st March, 2024 Particulars Amount Particulars Amount To Salary – Bali To Interest on Capitals: Akbar Bali To Reserve (10% of 65,500) To Partners' current accounts: Akbar Bali 3,000 2,500 2,000 6,550 29,475 29,475 By Net profit 73,000 73,000 13,000 Partner's Capital A/ c Date Particulars Akbar Bali Date Particulars Akbar Bali 31.03.24 To Balance c/d 50,000 40,000 01.04.23 By Balance b/d 50,000 40,000 Total 50,000 40,000 Total 50,000 40,000 Partner's Current A/ c Date Particulars Akbar Bali Date Particulars Akbar Bali 01.0423 To Balance b/d 3,000 01.04.23 By Balance b/d 10,000 31.03.24 To Drawings A/ c 1,000 2,000 31.03.24 By Interest on Capital 2,500 2,000 31.03.24 To Balance c/d 40,975 29,475 31.03.24 By Salary 3,000 31.03.24 By Profit and Loss App A/c 29,475 29,475 Total 41,975 34,475 Total 41,975 34,475 Note: Profit before charging interest on Capital and Salary to Bali = 70,000 + 3,000 =73,000

About This Chapter: Partnership & Companies

Paper

Paper 1: Accounting

Weightage

15-20%

Key Topics

Admission, Retirement, Death, Shares, Debentures

This chapter covers Admission, Retirement, Death, Shares, Debentures and is part of Paper 1: Accounting in the CA Foundation exam.

View Official ICAI Syllabus

Exam Strategy Tip

This topic carries 15-20% weightage. Focus on understanding core concepts rather than memorizing.

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More Questions from Partnership and LLP Accounts

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