Question 21 Chapter 2 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 21 Chapter 2 of +2-A

Question 21  Chapter 2 of +2-A

21. Naresh and Sukesh are partners with capitals of ₹ 3,00,000 each as on 31st March, 2019. Naresh had withdrawn ₹ 50,000 against capital on 1st October, 2018 and also ₹ 1,00,000 besides the drawings against capital. Sukesh also had drawings of ₹ 1,00,000.
Interest on capital is to be allowed @ 10% p.a.
Net profit for the year was ₹ 2,00,000, which is yet to be distributed.
Pass the Journal entries for interest on capital and distribution of profit.

 

The solution of Question 21 Chapter 2 of +2-A

Date Particulars
L.F. Debit Credit
April 1 Profit and Loss Appropriation A/c Dr   82,500  
  To Naresh’s Capital A/c       42,500
  To Sukesh’s Capital A/c       40,000
  (Being interest on capital credited to partners capital account)        
  Profit and Loss Appropriation A/c Dr   1,17,500  
  To Naresh’s Capital A/c       58,750
  To Sukesh’s Capital A/c       58,750
  (Profit share transferred among partners)        

 

Profit and Loss Appropriation Account A/c
for the year ended 31st March 2019
Particulars
Amount Particulars
Amount
To Interest on Capital A/c *1     By Profit and Loss Adjustment A/c   2,00,000
Naresh’s Capital A/c 42,500        
Sukesh’s Capital A/c 40,000 82,500      
           
To Profit Transferred to *2          
Naresh’s Capital A/c 58,750        
Sukesh’s Capital A/c 58,750 1,17,500      
    2,00,000       2,00,000

Working Note:

*1: -Calculation of Total Interest on Ashish’s Capital, and Aakash’s Capital

In the Question there closing capital is given. So, we have to calculate opening capital balance as shown below: –
Particulars
Amount Amount
Capital Balance at the end of the year 3,00,000 3,00,000
Add: – drawing during the year against Capital 50,000  
Add: – Drawing during the year against the profit 1,00,000 1,00,000
Capital Balance at the beginning of the year 4,50,000 4,00,000

Note: – In this case, the partners introduced and withdrawal their capital during the year, so that’s why we have to calculate the interest on capital according to period.
Interest on Capital = Capital X Rate of Interest X Period
Naresh’s Capital
from the 01/04/2019 to 30/09/2019= 4,50,000
During the year he withdrawal capital of Rs. 50,000, So his Total capital will be 4,00,000 (4,50,000-50,000)
from the 01/10/2019 to 31/03/2020= 4,00,000
Rate of Interest = 10%
So, we have to calculate the depreciation of two periods of 6 months each as shown follows
= (4,50,000 X 10/100 X 6/12) + (4,00,000 X 10/100 X 6/12)
= 22,500 + 20,000
Total Interest on Naresh’s Capital = 42,500/-
Sukesh’s Capital = 4,00,000
= 4,00,000 X 10/100
Total Interest on Sukesh’s Capital = 40,000/-

*2: -Calculation of share of profit of Naresh’s and Sukesh’s
Profit Sharing Ratio = 1:1 (assumed as per provision of act Because ration is not given)
Net Profit after interest= 1,17,500
= 1,17,500 X 1/2
Profit share of Naresh’s = 58,750/-
= 1,17,500 X 1/2
Profit share of Sukesh’s = 58,750 /-



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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)

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

2 Book 1 min - Question 21 Chapter 2 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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