Dear Teachers,
These slides have been prepared based on the NCERT syllabus to support you in teaching Plus One and Plus Two Accountancy and Computerised Accounting.
Please review and verify the content before using it in your classrooms. If you find any errors or have feedback, please let me know.
Mujeeb Rahiman C
HSST Commerce
GHSS Pattikkad
Malappuram Dt.
✉️ mujeebchemmala@gmail.com
9995983075 �
Chapter -1
Accounting for Partnership
Basic Concepts
Preparation of Partners Capital accounts
Try to group the following transactions relating to Partners
1. Capital Introduced
2. Additional Capital introduced
3. Drawings
4. Share of profit
6. Interest on capital
7. Interest on drawings
8. Salary or Commission payable
5. Share of Loss
The underlined examples will increase capital and others will decrease capital
Capital Accounts of Partners
All transactions relating to the partners are recorded in this account. Since there are two or more partners, transactions relating to partners should be recorded in their respective capital accounts.
Methods of Preparing Partners' Capital Account
Fixed
Capital Method
Fluctuating Capital Method
Two Accounts are prepared
Capital Account
&
Current Account
One Account is prepared
Capital Account
1. Fixed Capital Method
Two accounts are maintained for each partner
1) Partner’s Capital account
2) Partner’s Current account
eg. Sunil’s Capital Account
Sunil’s Current Account
Shameer’s Capital Account
Shameer’s Current Account
Partner’s Capital Account
Opening Capital, additional capital introduced and withdrawals out of capital are shown in Partner's Capital Account
Partner's Capital Account
Date
Amount
Date
Amount
Cash / Bank
Particulars
Particulars
Balance b/d
Cash/bank
Balance c/d
Balance b/d
XXX
XXX
XXXX
XXX
XXX
XXXX
XXX
(withdrawal out of capital)
(Additional capital introduced)
JF
JF
Partner’s Current Account
Interest on capital, drawings, interest on drawings, salary, commission, share of profit or loss etc. are recorded in Partner’s Current Account
Partner's Current Account
Date
Amount
Date
Amount
Drawings
Interest on Drawings
Particulars
Particulars
Balance b/d
Interest on Capital
Salary
Commission
Balance c/d
Balance b/d
XXX
XXX
XXX
XXX
XXX
XXXX
XXX
XXX
XXX
XXX
XXXX
XXX
JF
JF
Profit and Loss Appropriation A/c
(Loss)
Profit and Loss Appropriation A/c
(Profit)
This method is known as Fixed Capital Method, as the original capital invested by any partner remains the same unless additional capital is brought in or part of capital is withdrawn as per agreement
2. Fluctuating Capital Methods
Only one account is maintained
1) Partner’s capital account
Partner’s Capital Account
All the items affecting partner’s capital account is recorded. Such as interest on capital, interest on drawings, drawings, salary, commission, share of profit or loss etc.
Balance in the capital accounts keeps on fluctuating year after year
Partner's Capital Account
Date
Amount
Date
Amount
Drawings
Interest on Drawings
Particulars
Particulars
Balance b/d
Cash/bank
Interest on Capital
Salary
Commission
Balance c/d
Balance b/d
XXX
XXX
XXX
XXX
XXX
XXX
XXXX
XXX
XXX
XXX
XXX
XXXX
XXX
JF
JF
Profit and Loss Appropriation A/c
(Profit)
Profit and Loss Appropriation A/c
Loss)
Since the capital balance of partners keeps on fluctuating from year to year, this method is known as Fluctuating Capital Method
MUJEEB RAHIMAN C
HSST COMMERCE
GHSS PATTIKKAD
MALAPPURAM DT
Preparation of Partners Capital accounts
Illustration # 01
Anand and Balan entered into a partnership contributing Rs. 50,000/- and Rs. 30,000/- respectively. They decided to share profits and losses in the ratio of 2:1. Anand was entitled to a salary of Rs. 5000/- p.a. Interest on capital was to be provided @ 6% p.a. The drawings of Anand and Balan for the year ending December 31, 2017 were Rs. 6000/- and Rs. 5000/- respectively. Interest on drawings, Anand Rs. 300/- and Balan Rs. 200/- to be charged.
The profits of the firm after providing for Anand's salary and interest on capital and taking into account interest on drawings were Rs. 15000/-
Prepare the Capital Accounts of Partners when capitals are
1) Fixed
2) Fluctuating
Fixed Capital Method
Anand’s Capital A/c
Anand’s Current A/c
&
Balan’s Capital A/c
Balan’s Current A/c
Fluctuating Capital Method
Anand’s Capital A/c
Balan’s Capital A/c
1) When Capitals are Fixed :
Anand's Capital Account
Date
Amount
Date
Amount
Particulars
Particulars
Cash
Balance c/d
Balance b/d
50000
50000
50000
50000
50000
31/12/17
01/01/18
Anand and Balan entered into a partnership contributing Rs. 50,000/- and Rs. 30,000/- respectively. They decided to share profits and losses in the ratio of 2:1. Anand was entitled to a salary of Rs. 5000/- p.a. Interest on capital was to be provided @ 6% p.a. The drawings of Anand and Balan for the year ending December 31, 2017 were Rs. 6000/- and Rs. 5000/- respectively. Interest on drawings, Anand Rs. 300/- and Balan Rs. 200/- to be charged.
Cash A/c Dr. 50000
To Anand’s Capital A/c 50000
Anand's Current Account
Date
Amount
Date
Amount
Drawings
Interest on Drawings
Particulars
Particulars
Salary
Interest on Capital
P and L Apn A/c (Profit)
Balance c/d
Balance b/d
5000
3000
10000
18000
6000
300
11700
18000
11700
50000 x 6
100
15000 x 2
3
31/12/17
31/12/17
31/12/17
31/12/17
31/12/17
31/12/17
01/01/18
Anand and Balan entered into a partnership contributing Rs. 50,000/- and Rs. 30,000/- respectively. They decided to share profits and losses in the ratio of 2:1. Anand was entitled to a salary of Rs. 5000/- p.a. Interest on capital was to be provided @ 6% p.a. The drawings of Anand and Balan for the year ending December 31, 2017 were Rs. 6000/- and Rs. 5000/- respectively. Interest on drawings, Anand Rs. 300/- and Balan Rs. 200/- to be charged.
The profits of the firm after providing for Anand's salary and interest on capital and taking into account interest on drawings were Rs. 15000/-
Salary A/c Dr. 5000
To Anand’s Current A/c 5000
Interest on Capital A/c Dr. 3000
To Anand’s Current A/c 3000
Anand’s Current A/c Dr. 6000
To Anand’s Drawings A/c 6000
Anand’s Current A/c Dr. 300
To Interest on Drawings A/c 300
Profit and Loss Appn. A/c Dr. 10000
To Anand’s Current A/c 10000
Balan's Capital Account
Date
Amount
Date
Amount
Particulars
Particulars
Cash
Balance c/d
Balance b/d
30000
30000
30000
30000
30000
Anand and Balan entered into a partnership contributing Rs. 50,000/- and Rs. 30,000/- respectively. They decided to share profits and losses in the ratio of 2:1. Anand was entitled to a salary of Rs. 5000/- p.a. Interest on capital was to be provided @ 6% p.a. The drawings of Anand and Balan for the year ending December 31, 2017 were Rs. 6000/- and Rs. 5000/- respectively. Interest on drawings, Anand Rs. 300/- and Balan Rs. 200/- to be charged.
31/12/17
01/01/18
Cash A/c Dr. 30000
To Balan’s Capital A/c 30000
Balan's Current Account
Date
Amount
Date
Amount
Drawings
Interest on Drawings
Particulars
Particulars
Interest on Capital
P and L Apn A/c (Profit)
Balance c/d
Balance b/d
1800
5000
6800
5000
200
1600
6800
1600
30000 x 6
100
15000 x 1
3
Anand and Balan entered into a partnership contributing Rs. 50,000/- and Rs. 30,000/- respectively. They decided to share profits and losses in the ratio of 2:1. Anand was entitled to a salary of Rs. 5000/- p.a. Interest on capital was to be provided @ 6% p.a. The drawings of Anand and Balan for the year ending December 31, 2017 were Rs. 6000/- and Rs. 5000/- respectively. Interest on drawings, Anand Rs. 300/- and Balan Rs. 200/- to be charged.
The profits of the firm after providing for Anand's salary and interest on capital and taking into account interest on drawings were Rs. 15000/-
31/12/17
31/12/17
01/01/18
31/12/17
31/12/17
31/12/17
Interest on Capital A/c Dr. 1800
To Balan’s Current A/c 1800
Balan’s Current A/c Dr. 5000
To Balan’s Drawings A/c 5000
Balan’s Current A/c Dr. 200
To Interest Drawings A/c 200
Profit and Loss Appn. A/c Dr. 5000
To Balan’s Current A/c 5000
2) When Capitals are Fluctuating :
Anand's Capital Account
Date
Amount
Date
Amount
Drawings
Interest on Drawings
Particulars
Particulars
Cash
Salary
Interest on Capital
P and L Apn A/c (Profit)
Balance c/d
Balance b/d
50000
5000
3000
10000
68000
6000
300
61700
68000
61700
50000 x 6
100
15000 x 2
3
Anand and Balan entered into a partnership contributing Rs. 50,000/- and Rs. 30,000/- respectively. They decided to share profits and losses in the ratio of 2:1. Anand was entitled to a salary of Rs. 5000/- p.a. Interest on capital was to be provided @ 6% p.a. The drawings of Anand and Balan for the year ending December 31, 2017 were Rs. 6000/- and Rs. 5000/- respectively. Interest on drawings, Anand Rs. 300/- and Balan Rs. 200/- to be charged.
The profits of the firm after providing for Anand's salary and interest on capital and taking into account interest on drawings were Rs. 15000/-
31/12/17
31/12/17
31/12/17
01/01/18
31/12/17
31/12/17
31/12/17
Balan's Capital Account
Date
Amount
Date
Amount
Drawings
Interest on Drawings
Particulars
Particulars
Cash
Interest on Capital
P and L Apn A/c (Profit)
Balance c/d
Balance b/d
30000
1800
5000
36800
5000
200
31600
36800
31600
30000 x 6
100
15000 x 1
3
Anand and Balan entered into a partnership contributing Rs. 50,000/- and Rs. 30,000/- respectively. They decided to share profits and losses in the ratio of 2:1. Anand was entitled to a salary of Rs. 5000/- p.a. Interest on capital was to be provided @ 6% p.a. The drawings of Anand and Balan for the year ending December 31, 2017 were Rs. 6000/- and Rs. 5000/- respectively. Interest on drawings, Anand Rs. 300/- and Balan Rs. 200/- to be charged.
The profits of the firm after providing for Anand's salary and interest on capital and taking into account interest on drawings were Rs. 15000/-
31/12/17
31/12/17
01/01/18
31/12/17
31/12/17
31/12/17
1) When Capitals are Fixed :
Anand's Capital Account
Rs. 50,000
Anand's Current Account
Rs. 11,700
Balan's Capital Account
Rs. 30,000
Balan's Current Account
Rs. 1,600
2) When Capitals are Fluctuating :
Anand's Capital Account
Rs. 61,700
Balan's Capital Account
Rs. 31,600
Comparing the capital balance of Partners
MUJEEB RAHIMAN C
HSST COMMERCE
GHSS PATTIKKAD
MALAPPURAM DT