Question 42 Chapter 2 of +2-A
42. C and D are partners in a firm; C has contributed 1,00,000 and D 60,000 as capital. Interest is payable @ 6% p.a. and D is entitled to a salary of 3,000 per month. In the year ended 31st March 2019, the profit was 80,000 before interest and salary. Divide the amount between C and D.
The solution of Question 42 Chapter 2 of +2-A:
| Profit and Loss Appropriation Account for the year ended 31st March 2019 |
||||||
| Expenditure |
Amount | Income |
Amount | |||
| To Salary to D A/c | By Profit and Loss Adjustment A/c | 80,000 | ||||
| 3,000 X 12 | 36,000 | |||||
| To Interest on Capital A/c *1 | ||||||
| C’s Capital A/c | 6,000 | |||||
| D’s Capital A/c | 3,600 | 9,600 | ||||
| To Profit Transferred to *2 | ||||||
| C’s Capital A/c | 17,200 | |||||
| D’s Capital A/c | 17,200 | 34,400 | ||||
| 80,000 | 80,000 | |||||
Working Note: –
*1: -Calculation of Total Interest on C’s Capital, and D’s Capital
Interest on Capital = Capital X Rate of Interest X Period
Rate of Interest = 6%
Period = Whole year(So we don’t need to add period in the formula)
C’s Capital = 1,00,000
Interest on C’s Capital = 1,00,000 X 6/100
Interest on C’s Capital = 6,000/-
D’s Capital = 60,000
Interest on D’s Capital = 60,000 X 6/100
Interest on D’s Capital = 3,600/-
*2: -Calculation of share of profit of Ashish’s and Aakash’s
Profit-Sharing Ratio = 1: 1
Net Profit after interest & Salary = 34,400
profit share of C = 34,400 X 1/2
Profit share of C = 17,200/-
Profit share of D = 34,400 X 1/2
Profit share of D = 17,200/-
Comment if you have any questions.
Also, Check out the solved question of previous Chapters: –
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
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
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