Question 37 Chapter 2 – Unimax Class 12 Part 1 – 2021

Question 37 Chapter 2 - Unimax Class 12 Part 1 - 2021

Question 37 Chapter 2 – Unimax Class 12 Part 1

37. The partnership agreement of Kanu and Shruti provides that :
(i) Profits will be shared equally.
(ii) Shruti will be allowed an annual salary of Rs. 4800.
(iii) Kanu will be allowed a commission equal to 10% of net profit after allowing Shruti’s salary but before any other adjustments.
(iv) 7% interest will be allowed on partners’ fixed capitals.
(v) 5% interest will charged on partners’ annual drawings without considering time period.
(vi) The fixed Capitals of Kanu and Shruti are Rs. 100000 and Rs. 80000 respectively. Their annual drawings were Rs. 16000 and Rs. 14000 respectively.
The net profit for year ending 31st March, 2021 before providing above adjustments amounted to Rs. 40000. Prepare firm’s Profit and Loss Appropriation Account.

The solution of Question 37 Chapter 2 – Unimax Class 12 Part 1:

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

Particulars   Rs. Particulars   Rs.
To Interest on capital     By Net Profit   40000
– Kanu 7000   By int. on drawing    
– Shruti 5600 12600 – Kanu 800  
To Shruti’s Salary   4800 – Shruti 700  
To Kanu’s Commission   3520      
           
To Profit transferred to Capital A/c          
– Kanu 10290        
           
– Shruti 10290 20580      
    41500     41500

Working Note :
(1) Kanu’s Commission = (40000 – 4800) @ 10%
                                      = 35200 x 10% = 3520
(2) Interest on Drawings
Kanu : 16000 x5/100= Rs. 800 
Shruti 14000 x5/100= Rs. 700

https://tutorstips.com/not-for-profit-organisations/

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)

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

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

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