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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 �

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Chapter -1

Accounting for Partnership

Basic Concepts

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Profit & Loss Appropriation A/c

It is an extension of profit and loss account and is prepared to show how the net profit has been distributed among the partners.

All adjustments in respect of partner’s salary, partner’s

commission, interest on capital, interest on drawings, etc. are made through this account. It starts with the net profit/net loss as per Profit and Loss Account.

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Interest on Capital

Partner’s Salary

Partner’s Commission

Interest on Drawings

Profit / Loss after all these adjustments

is divided among the partners

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Trading And Profit & Loss Account

For the year ended Dec 31, 2019

Amt.

Particulars

Amt.

Particulars

132000

Gross Profit c/d

Gross Profit b/d

25000

Purchases

75000

Wages

2000

Sales

100000

Opening Stock

Closing Stock

32000

2500

Add O/s wages

132000

29500

29500

Interest

900

Salary

15000

Rent

1000

Commission

7500

36200

36200

Net Profit

(transferred to capital A/c)

5975

500

Less Prepaid

300

700

Depreciation :

Building 375

Furniture 750

Motor Van 2500

3625

Office Expenses

10000

Less Received 800

In advance

6700

Profit and Loss Appropriation A/c

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Profit and Loss Appropriation A/c

Amount

Amount

Salary to Partners

Commission to Partners

Particulars

Particulars

Profit and Loss Account

(Net Profit transferred)

Interest on drawings

Capital Accounts

(distribution of Profit)

XXXX

XX

XXXX

XXX

XXX

XXXX

Interest on Capital

Partner X XXX

Partner Y XXX

XXX

Partner X XXX

Partner Y XXX

XXX

Profit and Loss Account

(Net Loss transferred)

XXXX

Capital Accounts

(distribution of Loss)

Partner X XXX

Partner Y XXX

XXX

Partner X XX

Partner Y XX

Profit and Loss Appropriation A/c

XXX

(Net Profit)

(Net Loss)

BOTH entries

​

​

​

​

​

​

​

Interest on Partner’s Loan

Normally debited to PL ac

If given deduct from given NP

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Distribution of profit or Loss in Profit Sharing Ratio

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Profit OR LOSS

Anyone comes

SAY journal ENTRIES

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Journal

Date

Particulars

LF

Debit Amt

Credit Amt

Profit and Loss A/c

To Profit & Loss Appropriation A/c

Dr.

If Profit

1. Transfer of the balance of Profit and Loss Account to Profit

and Loss Appropriation Account :

Journal Entries

To Profit and Loss A/c

Profit & Loss Appropriation A/c

Dr.

If Loss

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2. Interest on Capital :

Journal Entries

Journal

Date

Particulars

LF

Debit Amt

Credit Amt

Interest on Capital A/c

To Partner’s Capital / Current A/c

Dr.

Crediting to Capital / Current Account

To Interest on Capital A/c

Profit & Loss Appropriation A/c

Dr.

Transferring to Profit & Loss Appn. A/c

Individually

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3. Partner’s Salary :

Journal Entries

Journal

Date

Particulars

LF

Debit Amt

Credit Amt

Salary A/c

To Partner’s Capital / Current A/c

Dr.

Crediting to Capital / Current Account

To Salary A/c

Profit & Loss Appropriation A/c

Dr.

Transferring to Profit & Loss Appn. A/c

Individually

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4. Partner’s Commission :

Journal Entries

Journal

Date

Particulars

LF

Debit Amt

Credit Amt

Commission A/c

To Partner’s Capital / Current A/c

Dr.

Crediting to Capital / Current Account

To Commission A/c

Profit & Loss Appropriation A/c

Dr.

Transferring to Profit & Loss Appn. A/c

Individually

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5. Interest on drawings :

Journal Entries

Journal

Date

Particulars

LF

Debit Amt

Credit Amt

Partner’s Capital /Current A/c

To Interest on drawings A/c

Dr.

Charging / debiting to Capital Account

To Profit & Loss Appropriation A/c

Interest on drawings A/c

Dr.

Transferring to Profit & Loss Appn. A/c

Individually

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6. Sharing of Profit / Loss after adjustments :

Journal Entries

Journal

Date

Particulars

LF

Debit Amt

Credit Amt

Profit & Loss Appropriation A/c

To Partner’s Capital /Current A/c

Dr.

If Profit

To Profit & Loss Appropriation A/c

Partner’s Capital /Current A/c

Dr.

If Loss

Individually

Individually

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MUJEEB RAHIMAN C

HSST COMMERCE

GHSS PATTIKKAD

MALAPPURAM DT

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Profit & Loss Appropriation A/c

​

Illustration

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On 1st Jan 2009 Anand, Balan and Chandran entered into partnership contributing Rs. 60,000, Rs. 40,000 and Rs. 20,000 respectively and sharing profits and losses in the ratio of 5:3:2. Balan is entitled to a salary of Rs. 5000 and Chandran a commission of Rs. 4000 per year. Interest on capital is to be allowed at 5% per annum. During the year Anand withdrew Rs. 10,000, Balan Rs. 6000 and Chandran Rs. 5000. Interest on drawings was charged Rs. 250 on Anand's drawings, Rs. 150 on Balan's drawings and Rs. 200 on Chandran's drawings. Profit in 2009 before the above mentioned adjustments was Rs. 50,000.

You are required to prepare Profit and Loss Appropriation Account and the partner's capital accounts.

NP asper Profit and loss account

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Profit and Loss Appropriation A/c

Amount

Amount

Salary - Balan

Commission - Chandran

Particulars

Particulars

Profit and Loss Account

(Net Profit transferred)

Interest on drawings

Capital Accounts

(distribution of Profit)

50000

600

50600

5000

4000

50600

Interest on Capital

Anand 3000

Chandran 1000

6000

Anand 17800

Chandran 7120

35600

Anand 250

Balan 150

Chandran 200

Balan 2000

Balan 10680

On 1st Jan 2009 Anand, Balan and Chandran entered into partnership contributing Rs. 60,000, Rs. 40,000 and Rs. 20,000 respectively and sharing profits and losses in the ratio of 5:3:2. Balan is entitled to a salary of Rs. 5000 and Chandran a commission of Rs. 4000 per year. Interest on capital is to be allowed at 5% per annum. During the year Anand withdrew Rs. 10000, Balan Rs. 6000 and Chandran Rs. 5000. Interest on drawings was charged Rs. 250 on Anand's drawings, Rs. 150 on Balan's drawings and Rs. 200 on Chandran's drawings. Profit in 2009 before the above mentioned adjustments was Rs. 50,000.

Calculation of Interest on Capital

​

Anand 60,000 x 5 = 3,000

100

Balan 40,000 x 5 = 2,000

100

​

Chandran 20,000 x 5 = 1,000

100

6,000

50600

15000

Sharing of Profit – Ratio 5:3:2

​

Anand 35,600 x 5 = 17,800

10

Balan 35,600 x 3 = 10,680

10

​

Chandran 35,600 x 2 = 7,120

10

5:3:2

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Partner's Capital Accounts

Date

Particulars

Anand

Balan

Cash

01/01/09

20,000

Chandran

Date

Anand

Balan

Chandran

Particulars

On 1st Jan 2009 Anand, Balan and Chandran entered into partnership contributing Rs. 60,000, Rs. 40,000 and Rs. 20,000 respectively and sharing profits and losses in the ratio of 5:3:2. Balan is entitled to a salary of Rs. 5000 and Chandran a commission of Rs. 4000 per year. Interest on capital is to be allowed at 5% per annum. During the year Anand withdrew Rs. 10000, Balan Rs. 6000 and Chandran Rs. 5000. Interest on drawings was charged Rs. 250 on Anand's drawings, Rs. 150 on Balan's drawings and Rs. 200 on Chandran's drawings. Profit in 2009 before the above mentioned adjustments was Rs. 50,000.

40,000

60,000

Salary

5,000

Commission

4,000

Interest on capital

1,000

3,000

2,000

31/12/09

31/12/09

31/12/09

Drawings

5,000

10,000

6,000

31/12/09

Interest on drawings

200

250

150

31/12/09

32,120

80,800

57,680

32,120

80,800

57,680

P & L Appn A/c

7,120

17,800

10,680

31/12/09

Balance c/d

26,920

70,550

51,530

31/12/09

Calculation of Interest on Capital

​

Anand 60,000 x 5 = 3,000

100

Balan 40,000 x 5 = 2,000

100

​

Chandran 20,000 x 5 = 1,000

100

6,000

Cr.

Dr.

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Profit and Loss Appropriation A/c

Amount

Amount

Salary - Balan

Commission - Chandran

Particulars

Particulars

Profit and Loss Account

(Net Profit transferred)

Interest on drawings

Capital Accounts

(distribution of Profit)

50000

600

50600

5000

4000

50600

Interest on Capital

Anand 3000

Chandran 1000

6000

Anand 17800

Chandran 7120

35600

Anand 250

Balan 150

Chandran 200

Balan 2000

Balan 10680

50600

15000

Partner's Capital Accounts

Date

Particulars

Anand

Balan

Cash

01/01/09

20,000

Chandran

Date

Anand

Balan

Chandran

Particulars

40,000

60,000

Salary

5,000

Commission

4,000

Interest on capital

1,000

3,000

2,000

31/12/09

31/12/09

31/12/09

Drawings

5,000

10,000

6,000

31/12/09

Interest on drawings

200

250

150

31/12/09

32,120

80,800

57,680

32,120

80,800

57,680

P & L Appn A/c

7,120

17,800

10,680

31/12/09

Balance c/d

26,920

70,550

51,530

31/12/09

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MUJEEB RAHIMAN C

HSST COMMERCE

GHSS PATTIKKAD

MALAPPURAM DT

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MUJEEB RAHIMAN C

HSST COMMERCE

GHSS PATTIKKAD

MALAPPURAM DT

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MUJEEB RAHIMAN C

HSST COMMERCE

GHSS PATTIKKAD

MALAPPURAM DT

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MUJEEB RAHIMAN C

HSST COMMERCE

GHSS PATTIKKAD

MALAPPURAM DT