Question 12 Chapter 2 of +2-A
12. X and Y are partners sharing profits in the ratio of 3: 2 with capitals of ₹ 8,00,000 and ₹ 6,00,000 respectively. Interest on capital is agreed @ 5% p.a. Y is to be allowed an annual salary of ₹ 60,000 which has not been withdrawn. Profit for the year ended 31st March 2019 before interest on capital but after charging Y’s salary amounted to ₹ 2,40,000.
The solution of Question 12 Chapter 2 of +2-A:
| Profit and Loss Adjustment Account A/c for the year ended 31st March 2019 |
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| Particulars |
Amount | Particulars |
Amount | ||
| To Manager’s Commission | 15,000 | By Profit and Loss A/c | 2,40,000 | 3,00,000 | |
| (3,00,000×5%) | Add: Y’s salary | 60,000 | |||
| To Profit and Loss Appropriation A/c (B. fig) | 2,85,000 | ||||
| 4,00,000 | 4,00,000 | ||||
| Profit and Loss Appropriation Account A/c for the year ended 31st March 2019 |
|||||
| Particulars |
Amount | Particulars |
Amount | ||
| To Y’s Salary A/c | 60,000 | By Profit and Loss Adjustment Account A/c | 2,85,000 | ||
| To Interest on Capital A/c *1 | |||||
| X’s Capital | 40,000 | ||||
| Y’s Capital | 30,000 | 70,000 |
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| To X’s Capital A/c | 93,000 |
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| 1,55,000 × 3/5 | |||||
| To Y’s Capital A/c | 62,000 |
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| 1,55,000 × 2/5 | |||||
| 2,85,000 | 2,85,000 | ||||
Working Note: –
*1: -Calculation of Total Interest on X’s Capital, Y’s Capital and Z’s Capital
Interest on X’s Capital = Capital X Rate of Interest X Period
X’s Capital = 8,00,000
Rate of Interest = 5%
Period = Whole year(So we don’t need to add period in the formula)
= 8,00,000 X 5/100
Total Interest on X’s Capital = 40,000/-
Y’s Capital = 6,00,000
Rate of Interest = 5%
Period = Whole year(So we don’t need to add period in the formula)
= 6,00,000 X 5/100
Total Interest on Y’s Capital = 30,000/-
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Also, Check out the solved question of previous Chapters: –
T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
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