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Question 44 Chapter 3 – Unimax Class 12 Part 1
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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 |
| Interest on Drawings | 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 3 – 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
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| 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 4 Types
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