(a) From the following information, prepare Capital accounts of partners Mannan and Sevagan, when their capitals are fluctuating. | Particulars | Mannan (₹) | Sevagan (₹) | | --- | --- | --- | | Capital on 1st January 2018 (Cr. Balance) | 2,00,000 | 1,75,000 | | Drawings during 2018 | 40,000 | 35,000 | | Interest on Drawings | 1,000 | 500 | | Share of profit for 2018 | 21,000 | 16,500 | | Interest on Capital | 12,000 | 10,500 | | Salary | 18,000 | - | | Commission | - | 2,500 | OR (b) Roja, Neela and Kanaga are partners sharing profits and losses in the ratio of 4 : 3 : 3. On 1st April 2017, Roja retires from partnership and on retirement, the following adjustments are agreed upon. (i) Increase the value of building by ₹ 30,000. (ii) Depreciate stock by ₹ 5,000 and furniture by ₹ 12,000. (iii) Provide an outstanding liability of ₹ 1,000 Pass journal entries and prepare Revaluation account.

> > [!TLDR] > (a) Fluctuating capital balances c/d: Mannan **₹2,10,000**, Sevagan **₹1,69,000**. (b) Revaluation Account shows a **profit of ₹12,000** (Building +30,000 less Stock 5,000, Furniture 12,000, Outstanding liability 1,000). > > ## (a) Partners' Capital Accounts — Fluctuating Capital Method > > Under the fluctuating method there is a single capital account per partner: all appropriations (interest on capital, salary, commission, share of profit) are **credited** and drawings & interest on drawings are **debited**. > > | Particulars | Mannan (₹) | Sevagan (₹) | Particulars | Mannan (₹) | Sevagan (₹) | > | --- | --- | --- | --- | --- | --- | > | To Drawings | 40,000 | 35,000 | By Balance b/d | 2,00,000 | 1,75,000 | > | To Interest on drawings | 1,000 | 500 | By Interest on capital | 12,000 | 10,500 | > | To Balance c/d | 2,10,000 | 1,69,000 | By Salary | 18,000 | — | > | | | | By Commission | — | 2,500 | > | | | | By Share of profit | 21,000 | 16,500 | > | **Total** | **2,51,000** | **2,04,500** | **Total** | **2,51,000** | **2,04,500** | > > Mannan's balance c/d = 2,51,000 − 41,000 = **₹2,10,000**; Sevagan's = 2,04,500 − 35,500 = **₹1,69,000**. > > ## (b) Retirement of Roja — Journal entries and Revaluation Account > > **Journal entries** > > | Date | Particulars | L.F. | Dr (₹) | Cr (₹) | > | --- | --- | --- | --- | --- | > | 1.4.2017 | Building A/c Dr | | 30,000 | | > | | To Revaluation A/c | | | 30,000 | > | | *(Increase in value of building)* | | | | > | | Revaluation A/c Dr | | 18,000 | | > | | To Stock A/c | | | 5,000 | > | | To Furniture A/c | | | 12,000 | > | | To Outstanding Liability A/c | | | 1,000 | > | | *(Decrease in assets and a new liability provided)* | | | | > | | Revaluation A/c Dr | | 12,000 | | …

(a) From the following information, prepare Capital accounts of partners Mannan and Sevagan, when their capita

Question 32 of 43

(a) From the following information, prepare Capital accounts of partners Mannan and Sevagan, when their capitals are fluctuating.

Particulars	Mannan (₹)	Sevagan (₹)
Capital on 1st January 2018 (Cr. Balance)	2,00,000	1,75,000
Drawings during 2018	40,000	35,000
Interest on Drawings	1,000	500
Share of profit for 2018	21,000	16,500
Interest on Capital	12,000	10,500
Salary	18,000	-
Commission	-	2,500

(b) Roja, Neela and Kanaga are partners sharing profits and losses in the ratio of 4 : 3 : 3. On 1st April 2017, Roja retires from partnership and on retirement, the following adjustments are agreed upon.

Increase the value of building by ₹ 30,000.
Depreciate stock by ₹ 5,000 and furniture by ₹ 12,000.
Provide an outstanding liability of ₹ 1,000 Pass journal entries and prepare Revaluation account.

Tamil Nadu DgeTamil Nadu HSC (DGE) Commerce Board 2024Subjective· 5mImportance★★★★★

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(a) Fluctuating capital balances c/d: Mannan ₹2,10,000, Sevagan ₹1,69,000. (b) Revaluation Account shows a profit of ₹12,000 (Building +30,000 less Stock 5,000, Furniture 12,000, Outstanding liability 1,000).

(a) Partners' Capital Accounts — Fluctuating Capital Method

Under the fluctuating method there is a single capital account per partner: all appropriations (interest on capital, salary, commission, share of profit) are credited and drawings & interest on drawings are debited.

Particulars	Mannan (₹)	Sevagan (₹)	Particulars	Mannan (₹)	Sevagan (₹)
To Drawings	40,000	35,000	By Balance b/d	2,00,000	1,75,000
To Interest on drawings	1,000	500	By Interest on capital	12,000	10,500
To Balance c/d	2,10,000	1,69,000	By Salary	18,000	—
			By Commission	—	2,500
			By Share of profit	21,000	16,500
Total	2,51,000	2,04,500	Total	2,51,000	2,04,500

Mannan's balance c/d = 2,51,000 − 41,000 = ₹2,10,000; Sevagan's = 2,04,500 − 35,500 = ₹1,69,000.

(b) Retirement of Roja — Journal entries and Revaluation Account

Journal entries

Date	Particulars	Dr (₹)	Cr (₹)
1.4.2017	Building A/c Dr	30,000
	To Revaluation A/c		30,000
	(Increase in value of building)
	Revaluation A/c Dr	18,000
	To Stock A/c		5,000
	To Furniture A/c		12,000
	To Outstanding Liability A/c		1,000
	(Decrease in assets and a new liability provided)
	Revaluation A/c Dr	12,000

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(a) Partners' Capital Accounts — Fluctuating Capital Method

(b) Retirement of Roja — Journal entries and Revaluation Account

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