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    Partnership Final Account

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    sujan Bhandari
    The document discusses the final accounts of a partnership business, including the trading account, profit and loss account, and profit and loss appropriation account. The profit and loss appropriation account shows how the net profit is distributed among partners according to their profit sharing ratios as specified in the partnership agreement or the Indian Partnership Act if no agreement exists. It allocates amounts for interest on capital and loans, partner salaries or commissions, and the divisible profit or loss to partners' capital accounts.

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    Partnership Final Account

    Uploaded by

    sujan Bhandari
    750 views1 page
    The document discusses the final accounts of a partnership business, including the trading account, profit and loss account, and profit and loss appropriation account. The profit and loss appropriation account shows how the net profit is distributed among partners according to their profit sharing ratios as specified in the partnership agreement or the Indian Partnership Act if no agreement exists. It allocates amounts for interest on capital and loans, partner salaries or commissions, and the divisible profit or loss to partners' capital accounts.

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    The document discusses the final accounts of a partnership business, including the trading account, profit and loss account, and profit and loss appropriation account. The profit and loss appropriation account shows how the net profit is distributed among partners according to their profit sharing ratios as specified in the partnership agreement or the Indian Partnership Act if no agreement exists. It allocates amounts for interest on capital and loans, partner salaries or commissions, and the divisible profit or loss to partners' capital accounts.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    750 views1 page

    Partnership Final Account

    Uploaded by

    sujan Bhandari
    The document discusses the final accounts of a partnership business, including the trading account, profit and loss account, and profit and loss appropriation account. The profit and loss appropriation account shows how the net profit is distributed among partners according to their profit sharing ratios as specified in the partnership agreement or the Indian Partnership Act if no agreement exists. It allocates amounts for interest on capital and loans, partner salaries or commissions, and the divisible profit or loss to partners' capital accounts.

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    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 1

    FINAL ACCOUNTS OF A PARTNERSHIP BUSINESS:

    (a) Trading Account . (b)Profit and Loss A/c . (c)Profit and Loss Appropriation a/c. (d) Balance Sheet.

    C. Profit and Loss Appropriation a/c:


     It is an extension of the P/L a/c.
     This account show how the Net Profit is being apportioned among partners i.e., to find out the Divisible Profit and
    transferred.
     In the absence of specific agreement, the provisions of Section 13 of the Indian Partnership Act, 1932 is
    applicable.
     The provisions are:
    a) A partner is not entitled to receive remuneration for taken part in the conduct of the business.
    b) The partners are entitled to share equally the profits earned or loss incurred.
    c) Interest on partner’s loan is to allowed @6% p.a.
    d) Interest on capital is payable out of profit only.

    Profit and Loss Appropriation a/c of ___________


    for the year ended _______________

    Particulars Rs Particulars Rs

    To Profit and Loss a/c (Net Loss) By Balance b/d


    To Reserve (transferred to reserve). By Profit and Loss a/c (Net Profit).
    To Interest of Capital. By Interest on Drawings.
    To Interest on Partner’s Loan. By Divisible Loss ( If Loss, transferred to
    To Partner’s Salary. partner’s capital a/c)
    To Partner’s Commission.
    To Divisible Profit (if Profit, transferred to
    partner’s Capital a/c)

    Q1. Following is the trail balance of Rajeev and Suresh co. as on 31st December, 2010:
    Debit Balances Rs Credit Balances Rs
    Stock as on 1.1.2010 9,000 Rajeev’s Capital a/c 80,000
    Purchases 64,500 Suresh’s Capital a/c 1,00,000
    Returns inwards 2,000 Sales 1,19,000
    Wages 16,000 Bills payable 12,000
    Carriage Inwards 2,000 Discount Received 500
    Octroi duty 2,500 Sundry creditors 42,000
    Manufacturing expenses 5,500
    Salaries 8,000
    Insurance 1,500
    Postage 100
    Advertisement 1,000
    Bad debts 300
    Land and Building 90,000
    Plant and Machinery 70,000
    Furniture 1,000
    Sundry debtors 25,400
    Drawings:
    Rajeev 1,800
    Suresh 1,400
    Cash-in-hand 500
    Cash-at-bank 49,000
    Bills receivables 2,000
    Total 3,53,500 Total 3,53,500
    You are required to prepare the Trading and Profit & Loss a/c for the year ended 31st December, 2010 and the Balance Sheet as
    on that date after taken into consideration the following adjustments:
    1. Partners decided to share profits and losses in the ratio 2:3.
    2. Stock as on 31st December, 2010 was Rs. 16,000.
    3. Outstanding expenses: Salaries Rs.1,500 and wages Rs.2,100.
    4. Insurance paid for 15 months upto 31st March, 2011.
    5. Write-off further bad debts of Rs.400.
    6. Reserve for doubtful debts @5% of debtors.
    7. Provide depreciation on land and building @5%; on furniture @10% and on plant and machinery @5%.
    8. Transfer 10%of net profit to reserve for meeting future expenses of business.
    9. Provide interest on capital @6% p.a. and drawing @5% p.a.
    10. Suresh received a salary @100 p.m and Rajeev received a commission of Rs.1,000.

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