Question 13 Chapter 2 of +2-A
13. Prem and Manoj are partners in a firm sharing profits in the ratio of 3 : 2. The Partnership Deed provided that Prem was to be paid salary of ₹ 2,500 per month and Manoj was to ger a commission of ₹ 10,000 per year. Interest on capital was to be allowed @ 5% p.a. and interest on drawings was to be charged @ 6% p.a. Interest on Prem’s drawings was ₹ 1,250 and on Manoj’s drawings was ₹ 425. Interest on Capitals of the partners were ₹ 10,000 and ₹ 7,500 respectively. The firm earned a profit of ₹ 90,575 for the year ended 31st March 2018.
Prepare Profit and Loss Appropriation Account of the firm.
The solution of Question 13 Chapter 2 of +2-A:
| Profit and Loss Appropriation Account A/c for the year ended 31st March 2019 |
||||||
| Particulars |
Amount | Particulars |
Amount | |||
| To Prem’s Salary A/c | 30,000 | By Profit and Loss Account A/c(net Profit) | 90,575 | |||
| (Rs 2,500 × 12) | ||||||
| To Commission to Manoj | 10,000 | To Interest on Drawing A/c *1 | ||||
| To Interest on Capital A/c *1 | Prem’s Capital | 1,250 | ||||
| Prem’s Capital | 10,000 | 70,000 |
Manoj’s Capital | 425 | 1,675 | |
| Manoj’s Capital | 7,500 | |||||
| To Prem’s Capital A/c | 20,850 | |||||
| 34,750 × 3/5 | ||||||
| To Manoj’s Capital A/c | 13,900 | |||||
| 34,750 × 2/5 | 34,750 |
|||||
| 92,250 | 92,250 | |||||
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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