CLASS 12TH ACCOUNTS. PARTNERSHIP FUNDAMENTALS. PARTNERSHIP ACCOUNTING. IN THIS VIDEO YOU WILL LEARN HOW TO PREPARE THE PROFIT AND LOSS APPROPRIATION ACCOUNT PARTNER'S CAPITAL ACCOUNTS AND PARTNER'S CURRENT ACCOUNT IN DETAIL. WATCH THE VIDEOS IN SEQUENCE. THANKS AND REGARDS.
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00:00Hello guys, hope you are doing well. This is Sonia Setia, your accounts and eco-tutor.
00:06In the previous video, we saw that which methods we can follow for a partner's capital account
00:15so that we can prepare a partner's capital account.
00:18In the previous video, we saw that we have two types of methods.
00:23One is fixed capital account method and the other is fluctuating capital account method.
00:29We saw the formats of both capital and current accounts.
00:34If you are new to this video, I will suggest you to watch the previous video's format.
00:42Then come to this video.
00:45Because I have given an illustration in this video.
00:48So in this video, we will see how to make a profit and loss appropriation account with actual numbers.
00:58How to make a partner's capital account and how to make a current account.
01:04So let's start with the example.
01:07So are we good to go?
01:09Yeah, I guess we are good to go.
01:13So let's start.
01:15So X and Y are partners sharing profits and losses in the ratio of 7 is to 3.
01:23X and Y are two partners in the partnership firm who share their profits and losses in the ratio of 7 is to 3.
01:32So their capital accounts as at 1st April 2020.
01:38So that X is the opening balance of capital.
01:51Because you can see the date 1st April.
01:54So it is starting.
01:56So this is the opening balance of capital.
01:58X is 5 lakhs and Y is 4 lakhs.
02:01Partners are allowed interest on capital at the rate of 5% per annum.
02:06So interest on capital will be provided by the partnership firm.
02:12What is the rate they have given?
02:145% per annum.
02:16So we will calculate 5% interest on their capital and where will we give?
02:22Profit and loss appropriation.
02:24Drawings of the partners during the year ended on 31st March 2021.
02:31But what are the drawings of X?
02:3472,000
02:36And drawings of Y?
02:3850,000
02:39Profit for the year before giving interest on capital.
02:44Profit before giving interest on capital and salary to Y at the rate of 5,000 per month.
02:55So we have to give salary to Y.
02:57X is not getting salary here.
03:00So who is getting salary?
03:02Y
03:04Y is getting salary at the rate of 5,000 per month.
03:07We will calculate it by multiplying it with the number of months i.e. 12.
03:15So he gave profit of 8 lakhs.
03:1810% of the net profit is to be set aside as general reserve.
03:25So he said that we have to transfer 10% of the net profit to the general reserve.
03:33What did he say next?
03:35Prepare profit and loss appropriation account.
03:37So what have we been told to make in this?
03:40At number 1, he said that we have to make a profit and loss appropriation account.
03:46For the year ended on 31st March 2021.
03:49At the end of the year, profit and loss appropriation account, capital account and current account are made.
03:55What else did he say?
03:56You are going to make a capital account.
03:58You are also going to make a current account of the partners.
04:01All these formats we have seen in the previous video in detail.
04:07In which we understood how and what we have to put.
04:12Every account, profit and loss appropriation.
04:15We saw in detail what we are going to put in it.
04:18We also saw in the capital account what transactions we are going to put.
04:23We also saw the current account.
04:26So we have this illustration.
04:28So we are starting with the profit and loss appropriation account.
04:32So in profit and loss appropriation, what is the first step?
04:38You transfer the net profit in the credit side.
04:46Why do you have to transfer on the credit side?
04:48Why not in the debit side?
04:50Because who makes this account?
04:54The credit side makes the partnership form.
04:56So what is the credit side?
04:58It is an income side of the firm.
05:01Or you can say it is a positive side.
05:06Or you can say it is a favorable side.
05:12And what is the debit side of profit and loss appropriation?
05:16Here the firm is going to show its expenses.
05:20The firm is going to show its expenses on the partnership form.
05:26We are going to show that on the debit side.
05:29So this is an expense side.
05:32Or you can say it is a negative side.
05:34Or you can say it is an unfavorable side.
05:37So we are starting with the transfer of profit and loss.
05:44The net profit balance that it has given, we will put it on the credit side.
05:50By profit and loss account.
05:52You can write in the bracket.
05:54Net profit transferred from profit and loss account.
05:58Because where did this profit come from?
06:00We have brought this profit from the profit and loss account.
06:03Which is transferred from the profit and loss appropriation account.
06:07You are given 8 lakhs in the question.
06:11We have transferred 8 lakhs.
06:13Now we will see the interest on capital.
06:16We saw that what is the capital of X?
06:195 lakhs.
06:22And what was the capital of Y?
06:244 lakhs.
06:26You can go upside and you can check.
06:30What is the capital?
06:325 lakhs of X and 4 lakhs of Y.
06:36We are going to calculate the interest on this.
06:39The rate of interest given is 5% per annum.
06:43So what will be the 5% of 5 lakhs?
06:47We will calculate it here.
06:495% of 5 lakhs.
06:51And 5% of 4 lakhs.
06:54So 5 files are 25,000.
06:58And you will cut 0 from 0.
07:015 rolls are 20.
07:03So this would be 20,000.
07:05And this would be 25,000.
07:07Right.
07:08So you can check.
07:10We have written the same.
07:12The interest.
07:13True interest on capital.
07:15Because here the current account is also being made.
07:18Means the firm is following the fixed capital account method.
07:23In which we make two accounts.
07:25One capital account and one current account.
07:27Because above it told us that the capital account will also be made and the current account will also be made.
07:32This means what is the firm following?
07:36Fixed capital account method.
07:38In which we will make both accounts.
07:40And we saw that we have to keep the capital fixed.
07:44Except two cases.
07:46Which if additional capital comes.
07:48Or drawing key will be against capital.
07:51So we can show those things in the capital account.
07:54Otherwise, where are we going to show everything else?
07:58We are going to show the current account.
08:01What are you going to give in profit and loss appropriation?
08:04If you have to give interest to the partner, you are going to give that.
08:07If you have to give commission, you are going to give that.
08:11If it has been said.
08:13In general, if you have to transfer the reserve, then you are going to do that.
08:16Right.
08:17True interest on capital.
08:19We have written.
08:20How much will go to the current account?
08:2225,000.
08:23We have calculated.
08:24And how much will go to the current account?
08:2620,000.
08:27This also we have calculated.
08:29Right.
08:30Total is 25,000.
08:3320,000.
08:3440,000.
08:355000.
08:36Right.
08:37And why did you ask to give salary above?
08:39Just go and check.
08:41How much salary do you have to give?
08:435000.
08:44Right.
08:45You are going to give a salary of 5000.
08:48That is per month.
08:49If you are given yearly.
08:51So you can copy.
08:52Paste the same figure.
08:54In the profit and loss appropriation account.
08:56But.
08:57If.
08:58The salary is given.
08:59Per month.
09:00Then you have to calculate it.
09:02As a yearly salary.
09:03Right.
09:04So just.
09:05Do not do anything.
09:06It is very simple.
09:075000 into 12.
09:08Right.
09:09You can write in the bracket also here.
09:105000 into 12.
09:11Because we have to write the entire year's salary here.
09:12So why salary?
09:13This will also go to the current account.
09:14We will transfer.
09:15That would be.
09:1660,000.
09:17Right.
09:19Just go upside.
09:20And check this.
09:21Right.
09:22General.
09:23Reserve.
09:24Go.
09:258 lakhs.
09:2610 percent.
09:27How much will it be?
09:288 lakhs.
09:2910 percent.
09:30Right.
09:31So.
09:32If.
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