Question 46 Chapter 2 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 46 Chapter 2 of +2-A

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
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/-

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)

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

2 Book 1 min - Question 46 Chapter 2 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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