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Definition
xx xx xx xx
Partners Current Account
Dr. Cr.
Particulars X (Rs.) Y (Rs.) Particulars X (Rs.) Y (Rs.)
To Bala e /d …… xx xx By Balance b/d xx xx
OR
To Cash/Bank / xx xx By Salary, xx xx
Goods (drawings) Commission etc.
To Interests on xx xx By Interest on xx xx
drawings Capital
xx xx xx xx
Partners Accounts
(Fluctuating Capital Method)
M/s X & Y
Partners Capital Account
Particulars X (Rs.) Y (Rs.) Particulars X (Rs.) Y (Rs.)
To Bala e /d …… xx xx By Balance b/d xx xx
OR
To Cash/Bank xx xx By Cash or Bank xx xx
(Withdrawn)
To Goods (drawings) xx xx By Salary, xx xx
Commission etc.
To Interest on xx xx By Interest on xx xx
Drawings Capital
To Share of Loss tfd. xx xx By Share of Profit xx xx
tfd.
To Balance c/d xx xx By Balance c/d xx xx
(If Credit Larger) (If debit larger)
xx xx xx xx
Payments to Partners
1) Payments to Partners as per Act
2. If the Partnership deed provides for As per the Partnership Act, interest on
payment of Interest but is silent capitals will be allowed only out of Profits
whether such interest is a charge or (an appropriation) and debited to the
an appropriation. P & L Appropriation a/c.
3) Interest On Drawings
Since Interest on Drawing is an Income of the firm , it is
always shown on the credit side of the P & L Appropriation.
If date is not given then Interest on drawings is taken for 6
months.
Partnership Final Accounts
M/s X & Y
Trading Account For the year Ended………………….
Continue……………
Particulars Rs. Particulars Rs.
Continue……………
Particulars Rs. Particulars Rs.
Financial Expenses
To Interest & bank charges xxxx
To Bad debts & prov. For xxxx
Bad debts
To Discount given & xxxx
Provision for Discount on
Debtors
Depreciation
To Depreciation on: xxxx
- Plant & Machinery xxxx
- Building xxxx
- Vehicles xxxx
- Other xxxx
Continue……………
Particulars Rs. Particulars Rs.
Other Expenses & Losses
To Goods Lost or Destroyed xxxx
( Cost Less Insurance Claim)
To Loss on sale of Fixed xxxx
assets
To Net Profit /d……….O‘….. xxxx BY Net Loss c/d xxxx
xxxx xxxx
Profit & Loss Appropriation Account For the year ended………..
Particulars Rs. Particulars Rs.
To Net Loss /d….O‘……… xxxx By Net Profit b/d xxxx
To I terest o Part er s xxxx By Interest on Drawings
Capital
To I terest o Part er s xxxx -X xxx
Loan
To salaries, Commission to xxxx -Y xxx xxxx
Partners
To Transfer to Reserve xxxx By Net Loss tfd. To
Capital a/cs (In PSR)
To net Profit tfd. To capital xxxx -X xxx
a/ s……O‘…… IN PS‘
-X xxx -Y xxx xxxx
-Y xxx xxxx
xxxx xxxx
Continue……………
Balance sheet as on…………….
Particulars Rs. Rs. Particulars Rs. Rs.
Capital accounts Fixed Assets
-X xxx Goodwill xxxx
-Y xxx xxxx Land xxxx
Current Accounts Plant & Machinery xxx
-X xxx Less: Depreciation (xxx) xxxx
-Y xxx xxxx Building (Gross cost) xxx
Reserves Less: Depreciation (xxx) xxxx
General Reserve Vehicles (Gross cost) xxx
Loans from Partners Less: Depreciation (xxx) xxxx
-X xxx Investment xxxx
-Y xxx xxxx
Continue……………
Particulars Rs. Rs. Particulars Rs. Rs.
Other Liabilities Current Assets
Loans from Bank xxx Stock xxxx
Add: Accrued Interest xxx xxxx Debtors xxx
Bank Overdraft xxxx Less: prov. For bad (xxx)
debts
Sundry Creditors xxx Less: Prov. For (xxx) xxxx
Discounts
Less: Provision for xxx xxxx Bills Receivable xxxx
Discount
Bills Payable xxxx Loans and Advances xxxx
given
Outstanding Expenses xxxx Insurance claim xxxx
Receivable
Income received in xxxx Prepaid Expenses xxxx
Advances
Cash in Hand xxxx
Bank Balance Xxxx
Xxxx xxxx
Adjustment in Final Account
Adjustment Profit & Loss A/c Balance Sheet
A. Errors
1. Sales Not Recorded Add to Sales as per T.B. Add to Debtors as per T.B.
2. Purchases Not Recorded Add to Purchases as per T.B. Add to Creditors as per T.B.
3. Goods on Sale or Return a) Deduct Sale Value from a) Deduct Sales value from
Sales Debtors
b) Add Cost to Closing Stock b) Add Cost to closing stock
4. Revenue Expenses Treated Add to Expenses a/c Deduct from Assets a/c
as capital expenses
5. Capital Expenses treated Deduct from Expenses a/c Add to Asset a/c
as Revenue Expenses
B. Current Expenses
6. Prepaid Expenses Deduct from Expenses a/c Show on Asset side
7. Outstanding Expenses Add to Expenses a/c Show on Liability side
Adjustment Profit & Loss A/c Balance Sheet
8. Depreciation Show on Debit side Deduct from gross Cost of
each asset
9. Closing Stock Shown on Credit side Show on Asset Side
10. Deferred Revenue Show Amt written off on Show on Remaining Balance
Expenditure written off Debit side on Asset side
C. Current Income
11. Income due not received Add to Income a/c Show on Asset side
12. Income Received in Deduct from Income a/c Show on Liability Side
Advance
D. Provision / Reserve
13. Reserve for Doubtful Bad debts Deduct New Reserve from
Debts Add: New Reserve Sundry Debtors
Less : Old Reserve
Final Figure
Note :1 If Final Figure (+)
show on Debits side P &L a/c
If Final Figure (-) Show on
Credit side P & L a/c
Adjustment Profit & Loss A/c Balance Sheet
14. Reserve for Discount on Discount Deduct New Reserve from
Debtors Add: new Reserve Sundry Debtors
Less: Old Reserve
Final Figure
Note :1 If Final Figure (+)
show on Debits side P &L a/c
If Final Figure (-) Show on
Credit side P & L a/c
15. Reserve for Discount on Discount Deduct New Reserve from
Creditors Add: New Reserve Sundry Creditors
Less: Old Reserve
Final Figure
Note :1 If Final Figure (+)
show on Credit side P &L a/c
If Final Figure (-) Show on
Debit side P & L a/c
Adjustment Profit & Loss A/c Balance Sheet
E. Losses / Gains
16. Goods Given away as a) Show Cost on Cr. Of ---
Samples Trading a/c
b) Show cost on Dr. of P & L
a/c
17. Goods Entirely Lost on a) Show Cost on Cr. Of ---
Assets side Trading a/c
b) Show cost on Dr. of P & L
a/c
18. Goods Lost; Insurance a) Show full Cost on Cr. Of Show Insurance Claim due
Claim Due Trading A/c on Asset side
b) Show Loss (Cost less
Claim ) on Dr. of P & L a/c
19.Goods taken by partner Show Cost on Cr. Of Trading De it to Part er s Capital/
a/c Current a/c
20. Profit on Sale of Asset Show Profit on Cr. Of P & L Deduct W.D.V from Asset a/c
a/c
21. Loss on sale of Asset Show Loss on Dr. of P & L a/c Deduct W.D.V from Asset a/c
Adjusting Appropriation in Final accounts
Adjustments Profit & Loss Balance Sheet
Appropriation a/c
1. Transfer to Reserve Show on Dr. of P & L Appr. Show on Liability Side
A/c
2. Interest to Partners Show on Dr. of P & L Appr. Credit Capital / Current a/c
A/c
3. Salary etc. to Partners Show on Dr. of P & L Appr. Credit Capital / Current a/c
A/c
4. Interest on Drawings Show on Cr. of P & L Appr. Debit Capital / Current a/c
A/c
5. Net Profit Distributed Show on Dr. of P & L Appr. Credit Capital / Current a/c
A/c
6. Net Loss Transferred Show on Cr. of P & L Appr. Debit Capital / Current a/c
A/c
Adjustment already in T.B.
Note:
Net Worth = Asset Less Outside Liabilities Or, , capitals + Accumulated Profits and reserves.
Division of profits when a partner is admitted
during year
Continue……………
Particulars Jan-Sept Oct- Dec Particulars Jan-Sept Oct- Dec
(Rs.) (Rs.) (Rs.) (Rs.)
To Net Profit
transferred to Capital:
1. Profit up to 30-9 :
71,550
(75,000 – 2250 -1200)
A : 2/3 x 71,550 = 47,700
B: 1/3 X 71,550 = 23,850
2. Profit after 1-10 :
21,450
A: 6/12 x 21,450 = 10,725
B: 3/12 x 21,450 = 5,362
C: 2/12 x 21,450 = 3,575
D: 1/12 x 21,450 = 1,788
75,000 24,450 75,000 24,450
Balance Sheet As at 31-12-2013
Liabilities (Rs.) (Rs.) Assets (Rs.) (Rs.)
Capital Accounts: Fixed Asset (Gross 60,000
Cost)
A 81,425 Less: Depreciation 20,000
up to 31-12-2013
B 37,812 40,000
C 25,775 Less: Depreciation 8,000 32,000
for 2013
D 19,038 1,64,050 Stock 69,100
Sundry Creditors 27,600 Add: Goods on sale 4,000 73,100
or return
Trade expense 1,200
outstanding
Continue……………
Liabilities (Rs.) (Rs.) Assets (Rs.) (Rs.)
Debtors 38,000
Less: Goods on sale 6,000
or return
32,000
Less: Provision for 5,000 27,000
Bad debts
Bank Account 60,750
1,92,850 1,92,850
Working Note:
1) The GP dividend in ratio of sales as follows:
a) 1,59,450 x 3,60,000 = 1,20,000
4,78,350
b) 1,59,450 – 1,20,000 = 39,450
2) The selling price (Rs.6,000) of goods on sale or return is
deducted from both sales and debtors.
3) The cost of goods on sales or return (Rs.4,000) is added to the
value of closing stock.
4) Partners Capital a/c
Particula A B C D Particula A B C D
rs rs
To 40,000 25,000 2,000 2,400 By Bal b/d 60,000 32,000 24,000 18,000
Drawings
To Bal c/d 81,425 37,812 25,775 19,038 By 3,000 1,600 200 150
Interest
By Salary --- --- --- 1,500
By Profit 47,700 23,850 --- ---
up to 30/9
By Profit 10,725 5,362 3,575 1,788
after 1/10
Continue……………
Particular Amt Amt Particulars Amt Amt
You are required to prepare Trading , Profit & Loss a/c for the year ended on 31st December
,2013 and Balance Sheet as on the date. Also Prepare partners Capital account showing the
final Balance
Adjustments On Retirementof a Partner
Adjustment of Goodwill on day of Retirement.
Note:
1) If Goodwill does not appear in the Books its Full value is considered . If Goodwill
already appeared in the Books its surplus value (the new value of G/W- Recorded
value) is considered.
Note:
1) If Goodwill does not appear in the Books Retiring partners share in its Full value is
considered . If Goodwill already appeared in the Books , His share in its surplus
value (the new value of G/W- Recorded value) is considered.
Note: If the continuing partners cash privately to the retiring partner against his
share in goodwill , no entry is passed in the books of the firm.
2) The value of goodwill to be considered in different cases is shown below—
A) Full Value or Surplus: - If Goodwill does not appear in the Books its Full value is
considered . If Goodwill already appeared in the Books its surplus value (the new
value of G/W- Recorded value) is considered.
B) No Change:- If the new value of goodwill is same as the recorded value, no entry is
passed in the books.
C) Deficit :- If there is deficit . i.e. the new value of goodwill is less than the recorded
value, the above entries are to be passed in the opposite manner.
Division of profits when a partner is Retires
during year
1) On Date of Death:
Profit & Loss A/ ……… Dr
To De eased Part er s apital a/
2) At Year End:
Profit & Loss Appropriatio a/ ………..Dr
To Profit & Loss Suspense a/c
Joint Life Policy
Cont………..
Date Particulars Rs. Date Particulars Rs.
1-1-14 To balance b/d 2,500 31-3-14 By bank a/c 1,00,000
(Policy money
received)
1-1-14 To bank a/c - 5,000
premium
31-3-14 To Part er s apital 92,500
a/c( X- 37,000 , Y –
37,000 , Z -18,500)
1,00,000 1,00,000
Balance Sheet as on 31-12-2011
Cont………..
Date Particulars Rs. Date Particulars Rs.
1-1-14 To balance b/d 2,500 31-3-14 By bank a/c 1,00,000
(Policy money
received)
1-1-14 To bank a/c - 5,000
premium
31-3-14 To Joint life policy 92,500
fund a/c
1,00,000 1,00,000
• Joint Life Policy Fund a/c
Date Particulars Rs. Date Particulars Rs.
31-12-11 To Joint life policy 5000 31-12-11 By P & L 5,000
a/c Appropriation
a/c
31-12-12 To Joint life policy 4000 31-12-12 By P & L 5,000
a/c Appropriation
a/c
31-12-12 To balance c/d 1000
5,000 5,000
1-1-13 By balance b/d 1,000
31-12-13 To Joint life policy 3,500 31-12-13 By P & L 5,000
a/c Appropriation
a/c
31-12-13 To balance c/d 2,500
6,000 6,000
Cont………..
Date Particulars Rs. Date Particulars Rs.
31-3-14 To Part er s Capital 95,000 1-1-14 By Balance b/d 2,500
a/c (X – 38,000 , Y-
38,000 , Z -19,000)
31-3-14 By joint life 92,500
policy a/c
95,000 95,000
Balance Sheet as on 31-12-2011
To Interest on Capital:
A( 46,000 X5% X 9/12
1725
B 225 75
V 750 250
To capital Pre
A 13800 X 1/2 6900
B 13800 X 1/4 3450
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Particulars Apr-Dec Jan- Particulars Jan-Sept Oct- Dec
(Rs.) Mar(Rs.) (Rs.) (Rs.)
Continue……………
Partners capital A/c
Particulars A B V Particulars A B V