Page 22 - VIRANSH COACHING CLASSES

Partner's Current Accounts
Dr. Cr.
Particulars Son Moon Particulars Son Moon
(`) (`) (`) (`)
To Drawing 22,500 15,000 By Interest on capital 55,625 28,750
To Interest on Drawing 1350 900 By Partner's Salaries A/c 15,000 -
To Profit & Loss A/c 45,000 30,000 By Commission A/c 7,500 5,250
To Balance c/d 9,275 - By Balance b/d - 11,900
78,125 45,900 78,125 45,900
Calculation of Interest on Capitals

Sun: 5% on ` 10,00,000 for one year will be
10,00,000 × 5
= 100 = ` 50,000

5% of ` 2,25,000 for 6 months will be
2,25,000 × 5 5 6
= 100 × 12 × 100 × 12 = ` 5,625

Total will be 50,000 + 5,625 = 55,625

Moon: 5% on 5,00,000 for one year will be
5,00,000 × 5
100 = ` 25,000

5% of ` 1,50,000 for 6 months will be

1,50,000 × 5 × 6
= 100 × 12 = ` 3,750

Total will be 25,000 + 3,750 = ` 28,750

Note :
1. Current Account balance may appear in either side i.e. Debit or Credit side
2. In the absence of any instruction the Capital Account should be prepared by Fluctuating
capital methods
3. Interest on loan of partners is treated as liability so it is credited to partners current ac-
count. But when there is no current account and partners are maintaining Fluctuating
capital method than interest on loan of partner is credited to Pratners Capital A/c

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