ZIMSEC O Level Principles of Accounting: Accounting for Partnerships: Capital and Current Accounts Example

  • Bearing in mind what we have said in the introduction to capital and current accountshere 
  • And the basic guidelines here
  • It is important to add the fact in this topic will mostly deal with making entries into Capital and Current Accounts among other things
  • The example below involves making simple entries into Capital and Current Accounts
  • This will hopefully get us started and help in later topics as we encounter much more detailed examples

Example on Capital and Current Accounts

Save and Moyo are trading in partnership sharing profits and losses and equally. Interest at 5% per annum is allowed or charged on both the capital account and the current account balances at the beginning of the year. Interest is charged on drawings at 5% per annum. The partners are entitled to annual salaries of: Save $12 000; Moyo $8 000.

Save and Moyo
Trial Balance as at 31 December 20X8
Capital Accounts: Save100 000
Moyo50 000
Current Accounts: Save2 000
Cash Drawings for the year: Save15 000
Moyo10 000
Freehold premises at cost50 000
Stock at 1 January 20x875 000
Fixtures and Fittings at cost15 000
Purchases and Stock Returns380 00012 000
Bank31 600
Sales and Sales Returns6 000508 000
Trade Debtors and Trade Creditors52 40033 300
Carriage Inwards21 500
Carriage outwards3 000
Staff Salaries42 000
VAT8 700
Office Expenses7 500
Provision for doubtful debts2000
Advertising 5 000
Discounts Allowed and received1 2001 000
Bad Debts1 400
Rent and business rates2 800
Accumulated provision for depreciation on fixtures and fittings3 000

720 000

720 000

December 20X8:

  1. Stock on hand was valued at $68 000
  2. Purchase invoices amounting to $3 000 for goods included in the stock valuation at a above had not been recorded
  3. Staff salaries owing $900
  4. Business rates paid in advance $200
  5. Provision for doubtful debts to be increased to $2 400
  6. Goods withdrawn by partners for private use had not been recorded and were valued at: Save
    $500 and Moyo $630. No interest is to be charged on these amounts
  7. Provision is to be made for depreciation of fixtures and fittings at 10% on cost
  8. Interest on drawings for the year is to be charged: Save $360 Moyo $280


  • As you can see this a comprehensive question we will be using it to illustrate partnership basics  and not just here


  1. Show the capital and current accounts for Save and Moyo for the year ended 31 December 20×8
  • The solution to the requirement above can be found here

To access more topics go to the Principles of Accounts Notes.