Question 43 Chapter 2 of +2- Part-

Question 43 Chapter 2 of +2-Part-1

43. (Profit and loss adjustment a/c) On April 1, 2018 John and Robert commenced business as partners with an initial capital of Rs.20,000 and Rs.30,000 in their respective accounts. The partnership deed provided inter alia that
Profit/Loss shall be shared in the ratio of 2:3 as between John and Robert.
Partners shall be entitled to interest on capital at the commencement of each year at 6% p.a. and
Interest on drawings shall be charged at 8% p.a.
During the year ended 31-3-2019, the firm made a profit of Rs.19,280 before adjustment of interest on capital and drawings. The partners withdrew during the year Rs.3,000 each at the end of every quarter commencing from 30-6-2018.
You are required to open a profit and loss adjustment account.

 

The solution of Question 43 Chapter 2 of +2 Part-1: – 

 

Profit and Loss Account A/c
Particulars
AmountParticulars
Amount
To Interest on capital – John1,200 By Profit b/d 19,280
-Robert1,8003,000By interest on drawings:  
   -John360 
   -Robert360720
      
To Net profit transferred to Capital a/cs     
-John 6,800    
-Robert10,20017,000   
  20,000  20,000


(a)If capitals are fluctuating :

 

Profit and Loss Account A/c
 
Particulars
JohnRobertParticulars
JohnRobert
To Drawings A/c 12,00012,000By Profit b/d 20,00030,000
To Interest on Drawings A/c 360360By Interest on Capital A/c 1,2001,800
    By P&L Adjustment A/c 6,80010,200
To Balance c/d  15,64029,640    
  28,00042,000
  28,00042,000

 

 

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)
30-6-183,000927,000
30-9-183,000618,000
31-12183,00039,000
31-3-193,00000
Sum of Product54,000

 

Interest on Drawing=54,000X8X1
10012
       
Interest on Drawing=360/-    

 

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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

 

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

2 Book 1 min - Question 43 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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