Question 22 Chapter 2 - Unimax Class 12 Part 1 - 2021

Question 22 Chapter 2 – Unimax Class 12 Part 1

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The solution of Question 22 Chapter 2 – Unimax Class 12 Part 1:

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

22. A and B are partners sharing profits in the ration of 3 : 2 with capitals of Rs. 50000 and Rs. 30000 respectively. Interest on Capital is agreed at 6% per annum. B is to be allowed an annual salary of Rs. 2500. During 2021 the profits of the year prior to calculation of interest on capital but after charging B’s salary amounted to Rs. 12500.
A provision of 5% of the profits (before charging any commission) is to be made in respect of A’s Commission.
Prepare an account showing allocation of profits and partners’ capital accounts.

The solution of Question 22 Chapter 2 – Unimax Class 12 Part 1:

Profit & Loss of proprition A/c For the year ended 31st Dec., 2006

Particulars		Rs.	Particulars	Rs.
To Interest on Capital			By Net Profit	12500
A	3000
B	1800	4800
To A’s Capital A/c (Commission) (Rs. 12500 – Rs. 4800) x 5/100		385
To Profit transferred to capital A/cs
A	4389
B	2926	7315
		12500		12500

Capital Accounts

Particulars	A	B	Particulars	A	B
To Balance o/d	57774	37226	By Balance b/d	50000	30000
			By Interest on capital	3000	1800
			By Commission A/c	385	–
			By Salary A/c	–	2500
			By Profit & Loss appropriation A/c	4389	2926

	57774	37226		57774	37226