Question 37 Chapter 3 - Unimax Class 12 Part 1 - 2021

Question 37 Chapter 3 – Unimax Class 12 Part 1

Table of Contents

The solution of Question 37 Chapter 3 – Unimax Class 12 Part 1:

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

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 3 – 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