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Question 48 Chapter 2 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 48 Chapter 2 of +2-A
Question No.48 - Chapter No.2 - T.S. Grewal +2 Book 2019-Solution

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Question 48 Chapter 2 of +2-A

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A and B are partners sharing profits in the ratio of 3: 2 with capitals of 50,000 and 30,000 respectively. Interest on capital is agreed @ 6% p.a. B to be allowed an annual salary of 2,500. During the year profit prior to interest on capital but after charging B’s salary amounted to 12,500. A provision of 5% of the profits is to be made in respect of the Manager’s Commission.

The solution of Question 48 Chapter 2 of +2-A

Profit and Loss Appropriation Account
for the year ended 31st March 2019
Expenditure
AmountIncome
Amount
To Manager’s Commission @ 5% *1 750By Net Profit before B’s Salary A/c 15,000
To Profit and Loss Appropriation A/c 14,25012,500+2,500  
  15,000  15,000

 

Profit and Loss Appropriation Account
for the year ended 31st March 2019
Expenditure
AmountIncome
Amount
To Interest on Capital A/c *1  By Profit and Loss A/c 14,250
A’s Capital A/c3,000    
B’s Capital A/c1,8004,800   
To B’s Salary A/c *3 2,500   
To Profit Transferred to *2     
A’s Capital A/c4,170    
B’s Capital A/c2,7806,950   
  14,250  14,250

 

Particulars
ABParticulars
AB
   By Balance B/d50,00030,000
   By Interest on Capital A/c *13,0001,800
   By Salaries A/c2,500
   By P&L Appropriation A/c4,1702,780
To Balance c/d 57,170 37,080    
 57,170 37,080  57,17037,080

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Working Note: –

*1 Calculation of Managers’ Commission
Managers’ Commission = 5% on Net Profit before Salary

Managers’ Commission15,000X5
100

Managers’ Commission = 750/-

*2 Calculation of Interest on A’s, B’s, & C’s Capital
Interest on Capital = Opening Capital X Rate of Interest

Interest on A’s Capital50,000X6
100

Interest on A’s Capital  = 3,000/-

Interest on B’s Capital30,000X6
100

Interest on B’s Capital  = 1,800/-

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*3: -Calculation of share of profit of A’s & B’s

Profit Sharing Ratio = 3: 2
Net Profit after interest & Salary = 6,950

Profit share of A=6,950 X 3/5
Profit share of A=4,170/-
Profit share of B
=6,950 X 2/5
Profit share of B=2,780/-

 


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

 

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Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

+2 Book 1-min
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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