Ali and Bahadur are partners in a firm sharing profits and losses as Ali 70% and Bahadur 30%. Their respective capitals as at 1st April

Ali and Bahadur are partners in a firm sharing profits and losses as Ali 70% and Bahadur 30%. Their respective capitals as at 1st April 2022 stand as Ali ₹ 2,50,000 and Bahadur ₹ 2,00,000. The partners are allowed interest on capitals @ 5% p.a. Drawings of the partners during the year ended 31st March 2023, were ₹ 35,000 and ₹ 25,000 respectively.

Profit for the year, before allowing interest on capital and a yearly salary of Bahadur @ ₹ 30,000, was ₹ 4,00,000, 10% of divisible profit is to be transferred to Reserve.

Prepare Partner’s Current Account and Capital Accounts recording the above transactions.

[Ans: Current Accounts: Ali – ₹ 1,96,420; Bahadur – ₹ 1,08,830; Amount transferred to Reserve – ₹ 34,750.]