Question 46 Chapter 2 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 46 Chapter 2 of +2- Part-

Question 46 Chapter 2 of +2-Part-1

46. (Profit and loss Appropriation a/c, Fixed and Fluctuating Capital a/c’s) On 1st April, 2016 A and B entered in a partnership contributing Rs.24,000 and Rs.10,000 respectively. According to the deed, the interest on capital is to be allowed and on drawings to be charged @15% p.a. A and B shall receive a monthly salary of Rs.2,000 each. A is entitled to 2/5 of profits. During the year, the following transactions took place:
(a) On 1st October, 2016 A withdrew (on permanent basis)Rs.8,000 from his capital and B introduced Rs.4,000 as additional capital.
(b) The drawings of A and B were Rs.12,000 each drawn at different intervals of time and the interest corresponding to these drawings were Rs. 675 and Rs.450 respectively.
(c) The profit for the year before any adjustment is made was Rs.60,000.
Prepare the profit and loss appropriation account and the necessary accounts assuming that:
(i) The capitals are fluctuating.
(ii) The capitals are fixed.

 

The solution of Question 46 Chapter 2 of +2 Part-1: – 

 

Profit and Loss Account A/c
Particulars
Amount Particulars
Amount
To Interest on capital – A 3,000   By Profit b/d   60,000
-B 1,800 4,800 By interest on drawings:    
To salary- A 24,000   -A 675  
-B 24,000 48,000 -B 450 1,125
           
To Net profit transferred to Capital a/cs          
-A (3/5) 4,995        
-B (2/5) 3,330 8,325      
    61,125     61,125


(a)If capitals are fluctuating :

Profit and Loss Account A/c
 
Particulars
A B Particulars
A B
To Cash A/c   8,000 By Balance B/d   24,000 10,000
By Interest on Capital A/c   360 360 By Cash   4,000
To Interest on Drawings A/c   675 450 By Interest on Capital A/c   3,000 1,800
        By Salary   24,000 24,000
        By P&L Appropriation A/c   4,995 3,330
To Balance c/d
  35,320 30,680        
    55,995 43,130
    55,995 43,130

 

(b)If capitals are fixed :

Profit and Loss Account A/c
 
Particulars
A B Particulars
A B
To Cash A/c   8,000 By Balance B/d   24,000 10,000
        By Cash   4,000
To Balance c/d   16,000 14,000        
    24,000 14,000
    24,000 14,000

 

Profit and Loss Account A/c
 
Particulars
A B Particulars
A B
To Drawings A/c   12,000 12,000 By Interest on Capital A/c   3,000 1,800
To Interest on Drawings A/c   675 450 By Salary   24,000 24,000
        By P&L Appropriation A/c   4,995 3,330
To Balance c/d   19,320 16,680        
    31,995 29,130
    31,995 29,130

 

Working Note: –

Calculation of Interest on partners’ Capital:

 
  Amount
A  
On 24,000 for ½ year: 1,800
On 16,000 for ½ year: 1,200
  3,000

 

  Amount
B  
On 10,000 for ½ year: 750
On 14,000 for ½ year: 1,050
  1,800

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Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

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

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