Question 44 Chapter 2 of Class 12 Part – 1 Usha Publication

Question 44 Chapter 2 of Class 12 Part – 1 Usha Publication

44. (Profit and loss appropriation a/c) Ramesh and Suresh started a partnership on 1st April 2018 with a capital of Rs.30,000 and Rs.20,000 respectively. Suresh paid in further Rs.6,000 on 1st October 2018 and Rs.4,000 on 15th January 2019. Interest on capital is agreed at 6% p.a. Ramesh is to be allowed an annual salary of Rs.4,800 which has not been withdrawn. The profits for the year ended 31 March 2019 prior to charging salary amounted to Rs.14,000. A 5% provision of this amount is to be made in respect of a commission to the manager. Prepare an account showing the distribution of profits.

The solution to Question 44 Chapter 2 of Class 12 Part – 1 Usha Publication: -

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Profit and Loss App. A/c

Particulars		Amount	Particulars		Amount
To Interest on capital - Ramesh	1,800		By Profit b/d	14000
-Suresh	1,430	3,230	+ Salary	4800	18,800
To Prov. for Manager’s Commission - @5% on 14000		700
To Salary A/c		4,800
To Net profit transferred to Capital a/cs
- Ramesh	5,035
- Suresh	5,035	10,070
		14,000			14,000

Working Note: -

Calculation of Interest on Partners’ Capital:

	Amount
Ramesh on Rs.30,000 @6% for 1 year :	1,800
Suresh:
On 20,000 for 1 year:	1,200
On 6,000 for 6 months:	180
On 4,000 for 2 ½ months:	50
	1,430