Question 34 Chapter 3 - Unimax Class 12 Part 1 - 2021

Question 34 Chapter 3 – Unimax Class 12 Part 1

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The solution of Question 34 Chapter 3 – Unimax Class 12 Part 1:

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

34. A and B are partners sharing profit in the ratio of 3 : 2 with Opening Capitals of Rs. 50000 and Rs. 30000 respectively. Interest on Capital is agreed @ 6% per annum. B is to be allowed an annual salary of Rs. 2500. During the year ended 31st March, 2021 the profits of 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 after charging interest on capital salary is to be made in respect of the A’s commission. Prepare an account showing the allocation of profits. Also prepare partner’s Capital Accounts and current accounts. Current account balances on 1st April, 2020 were A Rs. 2000 (Cr.) ; B Rs. 1500 (Dr.).

The solution of Question 34 Chapter 3 – Unimax Class 12 Part 1:

Profit & Loss of Apropriation A/c For the year ended 31st March., 2021

Particulars		Rs.	Particulars	Rs.
To Interest on Capital			By Net Profit	12500
– A	3000
– B	1800	4800
To Profit A/c
– A	4389
– B	2926	7315
To A’s Commission		385
		12500		12500

Partner’s Capital Accounts

Date	Particulars	A	B	Date	Particulars	A	B
31-3-21	To Balance c/d	50000	30000	1-4-2020	By Balance b/d	50000	30000

Partner’s Capital Accounts

Particulars	A	B	Particulars	A	B
To Bal b/d		1500	By Balance b/d	2000
To Bal c/d	9774	5726	By Profit & Loss App. A/c (Profit)	4389	2926
			By int. on cap.	3000	1800
			By Salary A/c	–	2500
			By Commission	385	–
	9774	7226		9774	7226

Working Notes :
(1) A’s Commission = (12500 – 300 – 1800) 5% = Rs. 385
(2) Calculation of profit
A’s Share of profit
A’s Share of profit = 7315 x3/5= 4389
B’s Share of profit = 7315 x2/5= 2926