Question 46 Chapter 2 of +2-A
46. A and B are partners sharing profits and losses in the ratio of 3: 1. On 1st April 2018, their capitals were: A 50,000 and B 30,000. During the year ended 31st March 2019, they earned
a net profit of 50,000. The terms of a partnership are:
Interest on capital is to allowed @ 6% p.a.
A will get a commission @ 2% on turnover.
B will get a salary of 500 per month.
B will get a commission of 5% on profits after deduction of all expenses including such commission.
Partners’ drawings for the year were: A 8,000 and B 6,000. Turnover for the year was 3,00,000.
After considering the above facts, you are required to prepare Profit and Loss Appropriation Account and Partners’ Capital Accounts
The solution of Question 46 Chapter 2 of +2-A
| Profit and Loss Appropriation Account for the year ended 31st March 2019 |
||||||
| Expenditure |
Amount | Income |
Amount | |||
| To Interest on Capital A/c *1 | By Profit and Loss A/c | 50,000 | ||||
| A’s Capital A/c | 3,000 | |||||
| B’s Capital A/c | 1,800 | 4,800 | ||||
| To B’s Salary A/c 500 X 12 | 6,450 | |||||
| To Partner’s Commission A/c *2 | ||||||
| A’s Capital A/c | 6,000 | |||||
| B’s Capital A/c | 1,581 | 7,581 | ||||
| To Profit Transferred to *3 | ||||||
| A’s Capital A/c | 23,714 | |||||
| B’s Capital A/c | 7,905 | 31,619 | ||||
| 50,000 | 50,000 | |||||
| Partners’ Capital Accounts for the year ended 31st March 2019 |
|||||
| Particulars |
Sajal |
Kajal | Particulars |
Sajal | Kajal |
| To Drawings A/c | 8,000 | 6,000 | By Balance B/d | 50,000 | 50,000 |
| By Interest on Capital A/c *1 | 3,000 | 1,800 | |||
| By Commission A/c | 6,000 | 1,581 | |||
| By Salary A/c | – | 6,000 | |||
| By P/L Appropriation A/c | 23,714 | 7,905 | |||
| To Balance c/d | 74,714 | 41,286 | |||
| 82,714 | 47,286 | 82,714 | 47,286 | ||
Working Note: –
*1 Calculation of Interest on A’s & B’s Capital
Interest on Capital= Opening Capital X Rate of Interest
| Interest on A’s Capital | = | 50,000 | X | 5 |
| 100 |
Interest on A’s Capital = 3,000/-
| Interest on B’s Capital | = | 30,000 | X | 6 |
| 100 |
Interest on B’s Capital = 1,800/-
*2 Calculation of Commission to Partners
| Commission to A | = | 2% on Turnover |
| Turnover | = | 3,00,000 |
| Commission to A | = | 3,00,000 | X | 2 |
| 100 |
Commission to A = 6,000/-
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| Commission to B | = | 5% on Profits after all Expense including such Commission |
| Profit after all Expense | = | 50,000 − 4,800 − 6,000 − 6,000 = Rs 33,200 |
| Commission to B | = | Profit after all Expense | X | Rate |
| 100 + Rate |
| Commission to B | = | 33,200 | X | 5 |
| 100 + 5 |
| Commission to B | = | 33,200 | X | 5 |
| 105 |
Commission to B = 1,581/- (app.)
*3: -Calculation of share of profit of A’s & B’s
Profit-Sharing Ratio = 3: 1
Net Profit after interest & Salary = 31,619
| Profit share of A | = | 31,619 X 3/4 |
| Profit share of A | = | 23,714/- |
| Profit share of B | = | 31,619 X 1/4 |
| Profit share of B | = | 7,905/- |
Comment if you have any questions.
Also, Check out the solved question of previous Chapters: –
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
