Partners Capital Account | Class 12

Partners Capital Account is an equity account in the accounting records of a partnership. A separate capital account is to be maintained for each partner and the capital contributed by each of them is credited to this account.

The capital account of partners can be maintained in any of the following two ways:

  1. Fixed Capital Account
  2. Fluctuating Capital Account




Fixed Capital Account

When fixed capital account is maintained by the firm then entries related to drawings, interest on capital, partner’s salary etc. is posted in partner’s current account. Whereas entries related to partners capital is posted in the capital account. The amount given in the capital account do not change except in case of introduction of additional capital.

Fluctuating Capital Account

When fluctuating capital account is maintained by the firm then entries related to partner’s capital, interest on drawings, partner’s salary etc. is posted in a single account which is named as capital account of partner. No separate accounts are maintained under this method.

Adjusted capital of old partners

Partners Capital Account : Example 1

Akash and Aman are partners sharing profits and losses in the ratio of 3/4 and 1/4 respectively. Anubhav is admitted into partnership for 1/3 share in profits.The capitals of Akash and Aman before adjustments are Rs. 160000 and Rs. 120000 respectively.Profit on revaluation of assets and liabilities – Rs. 16000 ,General Reserve – Rs. 12000 . Calculate the adjusted capital of Aman .

Explanation:-

Calculation of adjusted capitals of old partners
Aman s capital before adjustment = 160000

Add: Share in general reserve 12000 X 1/4 = 3000

Add: Profit on revaluation 16000 X 1/4 = 4000

Total = 167000




Capital brought by new partner as per capital of old Partner

Partners Capital Account : Example 2

Abhya and Amol are partners sharing profits and losses in the ratio of 3/5 and 2/5 respectively. Arpit is admitted into partnership for 1/3 share in profits.The capitals of Abhya and Amol before adjustments are 100000 and 100000 respectively. Profit on revaluation of assets and liabilities-Rs. 10000 , General Reserve-Rs. 10000 what will be the amount of capital to be brought in by Arpit?

Explanation:-

Calculation of adjusted capitals of old partners
Abhya s capital before adjustment = 100000

Add share in general reserve 10000 X 3/5 = 6000

Add profit on revaluation 10000 X 3/5 = 6000

Total = 112000
Amol s capital before adjustment = 100000

Add share in general reserve 10000 X 2/5 = 4000

Add profit on revaluation 10000 X 2/5 = 4000

Total = 108000
Calculation of total capital of new firm:

Total share of the firm = 1 , Arpit s share = 1/3

Remaining share for Abhya and Amol = 1 – 1/3 = 2/3

Total capital = Combined adjusted old capital of old partners X Reciprocal of proportion of share of old partners

= 112000 + 108000 X 3/2

= 220000 X 3/2 = 330000

Capital of Arpit = Total capital X Share of Arpit in profits

= 330000 X 1/3

= 110000

Capital of old partners on the basis of new partners capital

Partners Capital Account : Example 3

Aksh and Naksh are partners sharing profits and losses in the ratio of 3/5 and 2/5 respectively. Daksh admitted into partnership and it was decided that New profit sharing ratio among Aksh , Naksh and Daksh will be 3: 4: 2. Daksh brought 1200000 as his capital and old partners capital will be valued on the basis of Daksh s capital.What will be the capital all partners?

Explanation:-

Total capital of the firm = Capital brought by Daksh X Reciprocal of proportion of share of Daksh

= 1200000 X 9/2

= 5400000

Aksh s new capital = 5400000 X 3/9 = 1800000

Naksh s new capital = 5400000 X 4/9 = 2400000




Capital of partners when total capital of the new firm given

Partners Capital Account : Example 4

Amar and Akbar are partners Antony is admitted into partnership and it was decided that new profit sharing ratio between  Amar , Akbar and Antony will be 3/6 , 1/6 and 2/6 respectively.The total capital of the firm is fixed at Rs. 1200000 what will be the capital among Amar , Akbar and Antony ?

Explanation:-

Capital of partners = Total capital of the firm X New profit sharing ratio of partner

Amar s capital = 1200000 X 3/6 = 600000

Akbar s capital = 1200000 X 1/6 = 200000

Antony s capital = 1200000 X 2/6 = 400000

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