Question 21 Chapter 2 of Class 12 Part - 1 VK Publication

Question 21 Chapter 2 of Class 12 Part – 1

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The solution of Question 21 Chapter 2 of Class 12 Part – 1: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

21. Suchi and Ruchi are in partnership towards which they have contributed Rs. 6,00,000 each The profit for the year ended 31st March, 2018 was Rs. 5,00,000 before allowing interest on partner’s loan. Show the distribution of profit after considering that the loan provided by Suchi amounted to Rs. 2,00,000. Interest on capital has to be provided at 12% pa Drawing made by the partners were Rs. 50,000 each on which interest at 6 p.a. has to be provided. Ruchi is entitled to a commission on sales (Rs. 45,00,000) at 1%. It has also been a between the partners that 20% of the divisible profits is to be kept in Reserve Account.
Record the above in a Profit and Loss Appropriation Account.

The solution of Question 21 Chapter 2 of Class 12 Part – 1: –

Profit and Loss Account

Particulars	Amount	Particulars	Amount
To Interest On Partner’s Loan A/C	12,000	By Profit b/d	5,00,000
To Profit Transferred to Profit and Loss Appropriation A/c	4,88,000
	5,00,000		5,00,000

Profit and Loss Appreciation Account

Particulars		Amount	Particulars		Amount
To Interest On Capital A/C:			By Profit and Loss A/c		30,000
Suchi	72,000		By Interest On Drawings Account:
Ruchi	72,000	1,44,000	Suchi	1,500
To Ruchi’s Salary A/C		45,000	Ruchi	1,500	3,000
To Reserve A/C		60,400
To Profit Transferred To Capital A/C’s
Suchi	1,20,800
Ruchi	1,20,800	2,41,600
		4,91,000			4,91,000

Working Notes:
(i). If a partner has given loan to the firm and the rate of interest on such loan has not been given in the question, then as per the Indian Partnership Act, interest @ 6% p.a. is to be allowed on such loan.
(ii). Since interest on partner’s loan is treated as a charge against profit, it is debited to Profit and Loss Account.
(iii). Since the date of drawings is not given, interest on drawings will be calculated for an average period, i.e., six months.
(iv). Amount transferred to Reserve has been calculated at 20% of Rs. 3,02,000 (i.e. 4,88,000 + 3,000 – 1,44,000 – 45,000).

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