Question 42 Chapter 2 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 42 Chapter 2 of +2- Part-

Question 42 Chapter 2 of +2-Part-1

42. (Fluctuating Capital a/c’s/ Profit & Loss A/c) A and B are in partnership sharing profits and losses equally. A’s Capital is Rs.10,000 and B’s Capital is Rs.2,000. Profits for the year ended 31st March 2019 are Rs 6,000 before charging interest on drawings. Interest on 5% p.a. is to be charged on drawings which were as follows:

A Amount B Amount
1st July 2018 200 1st June 2018 100
1st Aug 2018 100 1st July 2018 100
1st Sept 2018 300 1st Sept. 2018 50
1st Nov 2018 50 1st Oct 2018 200
1st Feb. 2018 100 1st Dec. 2018 300

Assuming that the capitals are fluctuating, show the partners capital accounts and profit and loss account.

 

The solution of Question 42 Chapter 2 of +2 Part-1: – 

 

Profit and Loss Account A/c
Particulars
Amount Particulars
Amount
      By Profit b/d   6,000
      By interest on drawings:    
      -A 21.46  
      -B 19.38 40.84
           
To Net profit transferred to Capital a/cs          
-A (1/2) 5,940        
-B (1/2) 3,960 6,040.84      
    6,040.84     6,040.84

 

(a)If capitals are fluctuating :

 

Profit and Loss Account A/c
 
Particulars
A B Particulars
A B
To Drawings A/c   750 750 By Profit b/d   10,000 2,000
To Interest on Drawings A/c   21.46 19.38 By net profit   3,020.42 3,020.42
               
To Balance c/d   12,248.96 4251.04        
    13,020.42 5,020.42
    13,020.42 5,020.42

 

 

Working Note: –

Calculation of Interest on A’s Drawings:
We will do it with the product method because of partner withdrawal a different amount every time.

 
Date
Amount
(A)
Period Left after(B) Product
(C=A*B)
1-7-18 200 9 1,800
1-8-18 100 8 800
1-9-18 300 7 2,100
1-11-18 50 5 250
1-2-19 100 2 200
Sum of Product 5,150

 

Interest on Drawing = 5150 X 5 X 5
100 12
             
Interest on Drawing = 21.46/-        
 
Date
Amount
(A)
Period Left after(B) Product
(C=A*B)
1-7-18 100 10 1,000
1-8-18 100 9 900
1-9-18 50 7 350
1-11-18 200 6 1,200
1-2-19 300 4 1,200
Sum of Product 4,650

 

Interest on Drawing = 4650 X 5 X 1
100 12
             
Interest on Drawing = 19.38/-        

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Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

 

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2 Book 1 min - Question 42 Chapter 2 of +2 Part-1 - USHA Publication  12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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