Question 44 Chapter 3 - Unimax Class 12 Part 1 - 2021

Question 44 Chapter 3 – Unimax Class 12 Part 1

Table of Contents

The solution of Question 44 Chapter 3 – Unimax Class 12 Part 1:

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

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

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