Question 44 Chapter 2 – Unimax Class 12 Part 1 – 2021

Question 44 Chapter 2 - Unimax Class 12 Part 1 - 2021

Question 44 Chapter 2 – Unimax Class 12 Part 1

44. X, Y and Z are in partnership sharing profits and losses in the ratio of 2 : 1 : 1. It is agreed that interest on Capital will be allowed @ 5% per annum and interest on drawings will be charged @ 4% per annum. (No interest will be charged/allowed on current accounts).
The following are the particulars of the Capita, Current and Drawings Accounts of partners :

  X (Rs.) Y (Rs.) Z (Rs.)
Capital (1st January, 2021) 75000 40000 30000
Current Accounts (1st January, 2021) 10000(Cr.) 5000(Cr.) 5000(Dr.)
Drawings 15000 10000 10000
xs 500 250 350

The draft accounts for 2021 showed a net profit of Rs. 60000 before taking into account interest on capital and drawings and subject to following rectification of errors :
(a) Life Insurance premium of X amounting to Rs. 750 paid by the firm on 31st December, 2021 has been charged to miscellaneous expenditure account.
(b) Repairs of machinery amounting to Rs. 10000 has been debited to Plant Account and depreciation there on charged @ 20%.
(c) Travelling expenses of Rs. 3000 of Y for a pleasure trip to U.K. paid by the firm on 31st Dec., 2021 has been debited to Travelling Expenses Account.
You are required to prepare the Profit and Loss Appropriation Account for the year ended 31st December, 2021. Also show the partners current accounts.

The solution of Question 44 Chapter 2 – Unimax Class 12 Part 1:

  Rs.
Net Profit for 2021 as per accounts 60000
Add : Life Insurance Premium 750
(wrongly charged to P & L A/c)  
Travelling Expenses for a pleasure trip 3000
(Wrongly charged to P & L A/c)  
  63750
Less : Repairs of Machinery 8000
(wrongly debited to Plant & Machinery A/c  
(10000 – 2000)  
Rectified profit for 2021 55750

Profit & Loss of Appropriation A/c For the year ended

Particulars   Rs. Particulars   Rs.
To Interest on Capital     By Net Profit   55750
X 3750   By Interest on Drawings A/c    
Y 2000   X 500  
Z 1500 7250 Y 250  
To Profit transferred to Current A/cs     Z 350 1100
X 24800        
Y 12400        
Z 12400 49600      
    56850     56850

  Partner’s Current Accounts

Particulars X Y Z Particulars X Y Z
To Balance b/d     5000 By Balance b/d 10000 5000  
To Drawings 15750 13000 10000 By Interest on Capital 3750 2000 1500
To int. on Drawings 500 250 350 By Profit & Loss A/c 24800 12400 12400
To Balance c/d 22300 6150   By Balance c/d     1450
               
               
  38550 19400 15350   38550 19400 15350

What is Partnership – Meaning and its Types

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

Leave a Reply

Your email address will not be published. Required fields are marked *