2. Fixed Capital Plus Current Account
• Two Accounts are opened;
• Capital Account- This account records the capital
injected by the partner. This account remains the same
year on year unless new capital is injected.
• Current Account- This account records all transactions
that affect the capital account these are
– Profits/Loss – which increases or decreases the capital
– Interest on Capital earned
– Interest on Drawings Charged
– Partners salaries
– Drawings
3. Example
Example 3
Skip and U Jump sells toys . The capital contributed by the two partners on 1 st Jan 2003
Skip P80,000 and Jump P40,000.
Net profits in Dec 2004 was P30,000.00 and Drawings were SKIp 8000 and Jump 9000.
Partners agreed to share profit and losses equally in 2004.
On 1st Jan 2005 the pathers agreed on the following new terms
Salaries Skip 10000 and Jump 14000
Interest on Capital 7%
Profits/Loss to be shared equally
Drawings
Net Profit from P/L Skip Jump
2005 38000 13000 17000
2006 29000 12000 20000
Required
Appropriation Account
Current accounts for Partners for 3 years.
4. Solution
2004
Skip and Jump
Approprition Account for the 2004
Net Profit 30,000
Profit Shared Skip 15000
Jump 15000
30000
2005 Skip and Jump
Approprition Account for the 2005
Net Profit 38,000
Salary Skip 10000
Jump 14000
24000
Int. on Capital Skip 5600
Jump 2800 8400
5,600
Profit Share Skip 2800
Jump 2800 5600
Interest on drawings weren’t
accounted for/ included. This
is because interest on
drawings is not given in the
information therefore it
cannot be calculated. Same
applies for all the solutions.
5. Solution
2006 Skip and Jump
Approprition Account for the 2006
Net Profit 29,000
Salary Skip 10000
Jump 14000
24000
Int. on Capital Skip 5600
Jump 2800 8400
-3,400
Profit Share Skip -1700
Jump -1700 -3400
6. Solution
Current Account - Skip
2004 2004
Drawings 8,000 Profit Share 15,000
Bal c/d 7,000
15,000 15,000
2005
Drawings 13,000 Bal B/d 7,000
Bal c/d 12,400 salary 10,000
Interest on Capital 5,600
Profit Share 2,800
25,400 25,400
2006
Drawings 12,000 Bal b/d 12,400
Loss Share 1,700 Salary 10,000
Bal c/d 14,300 Interest on Capital 5,600
28,000 28,000
7. Solution
Current Account - Jump
2004 2004
Drawings 9,000 Profit Share 15,000
Bal c/d 6,000
15,000 15,000
2005
Drawings 17,000 Bal B/d 6,000
Bal c/d 8,600 salary 14,000
Interest on Capital 2,800
Profit Share 2,800
25,600 25,600
2006
Drawings 20,000 Bal b/d 8,600
Loss Share 1,700 Salary 14,000
Bal c/d 3,700 Interest on Capital 2,800
25,400 25,400
Bal b/d 3,700
