Question 37 Chapter 2 of +2-A - T.S. Grewal 12 Class Part

Question 37 Chapter 2 of +2-A

Table of Contents

The solution of Question 37 Chapter 2 of +2-A:

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

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

37. Following is the extract of the Balance Sheet of Neelkant and Mahadev as on 31st March 2019.

BALANCE SHEET as at 31st March 2019
Liabilities		Assets
Neelkant’s Capital	10,00,000	Sundry Assets	30,00,000
Mahadev’s Capita	10,00,000
Neelkant’s Current A/c	1,00,000
Mahadev’ Current A/c	1,00,000
Profit and Loss Appropriation	8,00,000
A/c 2018 −19

During the year, Mahadev’s drawings were 30,000. Profits during the year ended 31st March 2019 is 10,00,000. Calculate interest on capital @ 5% p.a. for the year ending 31st March 2019.

The solution of Question 37 Chapter 2 of +2-A:

Calculation of Interest on Neelkant’s & Mahadev’s Capital by Simple Method
Interest on Capital = Opening Capital X Rate of Interest

Interest on Neelkant’s Capital	=	10,00,000	X	5
				100

Interest on Neelkant’s Capital = 50,000/-

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Interest on Mahadev’s Capital	=	10,00,000	X	5
				100

Interest on Mahadev’s Capital = 50,000/-

Note: –

In this question, The Balance of the current account of both partners is given, So that’s why the capital account has fixed in nature.
When the capital account is fixed then all the transactions related to interest, profit or drawing are treated in the current account.
So Opening capital and closing capital will remain the same except in the case where capital is withdrawn by the partners so that’s why we simply calculate interest on capital the balance given in the balance sheet.

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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

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