ACCOUNTING FOR PARTNERSHIP FIRMS - FUNDAMENTALS - Partnership Accounts and Interest on Drawings/Capital (Class XII)

Oct 29, 2026

Accountancy exercises on fundamentals of partnership accounting for Class XII. Covers preparation of partners’ capital accounts (fixed and fluctuating), drawings accounts, and profit appropriation with salary and interest on capital/drawings. Includes commissions based on net profit before and after commission, monthly/quarterly drawings and interest computation using simple, product, and average period methods, plus journal entries for interest on drawings with fixed vs fluctuating capitals. Also includes work on profit and loss appropriation for a partnership with agreed profit ratio and interest on capital.

LanguageEnglish

CategoryExam

FormatPDF

Pages6

Reading Time15 min

AccessFree to download

Partnership Fundamentals

Capital Accounts, Drawings and Profit Appropriation

Salary/Commission, Interest on Capital and Drawings

Interest on Drawings Methods (Simple, Product, Average Period)

Journal Entries for Interest on Drawings

ACCOUNTANCY ACCOUNTING FOR PARTNERSHIP FIRMS FUNDAMENTALS Name: Date: Class: XII 1. A and B are partners with capitals of ₹60,000 and ₹20,000 respectively on 1st April,2017.Net profit (before taking into account the provisions of the deed) for the year ended 31st March ,2018 was ₹24,000 .The partnership deed provides for the following: a) B is entitled to a salary of ₹6,000 p.a b) Interest on capitals is to be allowed @6% p.a c) Interest on drawings is to be charged @5% p.a The drawings of the partners A and B were ₹6,000 and ₹4,000 respectively and interest on drawings for A being ₹200 and for B ₹100. Prepare capital accounts of partners along with their drawings account: i. If they are fixed and ii. If they are fluctuating. Salary or Commission to partner: i. Percentage of net profit before charging commission: Net profit (before commission) x rate of commission 100 ii. Percentage of net profit after charging commission: Net profit(before commission) x Rate of commission 100 + rate of commission 2. X and Y are partners in a firm .X is to get a commission of 10% of net profit before charging any commission .Y is to get a commission of 10% on net profit after charging all commissions .Net profit for the year ended 31st March 2018, before charging any commission was ₹55,000 . 3. A ,B and C are partners in a firm .According to the Partnership deed ,the partners are entitled to draw ₹7,000 per month. On the first day of every month A b and C drew ₹7,000; ₹6,000 and ₹5000 respectively. Interest on capitals and interest on drawings are fixed at 8% and 10% respectively. Profit for the year ended 31st March 2018 was ₹7,55,000 out of which ₹2,00,000 are to be transferred to General reserve .B and C are entitled to receive salary of ₹30,000 and ₹45,000 p.a respectively and A is entitled to receive a commission @10% on net distributable profits after charging such commission. On 1st April 2017,the balances oftheir capital accounts were ₹5,00,000 ; ₹4,00,000 ; ₹3,50,000 respectively. Prepare P&L appropriation A/c for the year ended 31st March 2018 and Capital Accounts of Partners in the books of the firm 4. Calculation of Interest on Drawings: Simple method and product method: In a partnership ,partners are charged interest on drawings @15% p.a .During the year ended 31st March ,2018 a partner drew as follows: | Date | 1st May 17 | 1st Aug,17 | 30th sep 17 | 31st Jan 18 | 31st Mar18 | | --- | --- | --- | --- | --- | --- | | Amt(₹) | 2,000 | 5,000 | 2,000 | 6,000 | 2,000 | What is the interest chargeable from the partner? 5. (when drawings are made for a period of 6 months only)A B and C are partners sharing profits equally. A drew regularly ₹6,000 in the beginning of every month for six months ended 30th September ,2017 .B drew regularly ₹6,000 at the end of every month for the six months ended 30th September ,2017 .C drew regularly ₹6,000 in the middle of every month for the six months ended 30th September ,2017 .Calculate interest on drawings @5% p.a when the books are closed on 31st March every year. 6. Average Period Method: Interest on Drawings = Total Drawings x Rate of Interest x Average period 100 12 Average Period = Months left after First Drawings + Months left after last Drawings 2 7. A Partner draws ₹1,000 per month. Under the Partnership Deed, interest on Drawings is to be charged @15% p.a .Calculate interest that should be charged to the partner if the drawings are made i. In the beginning of the month ii. In the middle of the month or iii. At the end of the month 8. Calculate interest in Drawings of Mr. Sidhu @10% p.a for the year ended 31st March,2018in each of the following alternative cases: Case.1 If he withdrew ₹6,000 in the beginning of each quarter Case.2 If he withdrew ₹6,000 at the end of each quarter Case.3 If he withdrew ₹9,000 in the middle of each quarter 9. Calculate interest on drawings of Rakesh @10% p.a for the year

FAQs

How do you prepare partners' capital accounts for fixed vs fluctuating capitals?

The document asks for capital accounts along with drawings for both fixed and fluctuating capital cases, incorporating salary/interest and interest on drawings as per the partnership deed. Profit appropriation is then reflected in the capital balances accordingly.

How is commission to partners calculated when it is based on net profit before or after charging commission?

It provides formulas for commission as a percentage of net profit before commission, and another formula for commission as a percentage after commission is charged. The rate of commission is used to adjust the base profit accordingly.

What methods are used to calculate interest on drawings in partnership accounts?

The content includes calculation of interest on drawings using the simple method and product method, and also an average period method formula. It further specifies how to compute interest when drawings occur at the beginning, middle, or end of the period.

Oct 29, 2026

Upload by notyourbestiee