Question 49 Chapter 2 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 49 Chapter 2 of +2-A

Question 49 Chapter 2 of +2-A

P, Q and R are in a partnership and as at 1st April 2018 their respective capitals were: 40,000,
30,000 and 30,000. Q is entitled to a salary of 6,000 and R 4,000 p.a. payable
before the division of profits. Interest is allowed on capital @ 5% p.a. and is not charged on drawings. Of the divisible profits, P is entitled to 50% of the first 10,000, Q to 30% and R to 20%, the rest of the profit is shared equally. Profits for the year ended 31st March 2019, after debiting partners’ salaries but before charging interest on capital was 21,000 and the partners had drawn 10,000 each on account of salaries, interest and profit.

Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2019 showing the distribution of profit and the Capital Accounts of the partners.

 

The solution of Question 49 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   21,000
P’s Capital A/c 2,000        
Q’s Capital A/c 1,500        
R’s Capital A/c 1,500 5,000      
To R’s Salary A/c   12,000      
To Profit Transferred to *2          
P’s Current A/c 7,000        
Q’s Current A/c 5,000
       
R’s Current A/c 4,000 16,000      
    21,000     21,000

 

Particulars
P Q R Particulars
P Q R
To Drawing a/c 10,000 10,000 10,000 By Balance B/d 40,000 30,000 30,000
        By Interest on Capital A/c *1 2,000 1,500 1,500
        By Salaries A/c 6,000 4,000
        By P&L Appropriation A/c*2 7,000 5,000 4,000 
To Balance c/d 39,000 32,500 29,500
       
  49,000 42,500 39,500
  49,000 42,500 39,500

Working Note: –

*1 Calculation of Interest on P’s, Q’s, & R’s Capital
Interest on Capital = Opening Capital X Rate of Interest

Interest on P’s Capital 40,000 X 5
100

Interest on P’s Capital = 2,000/-

Interest on Q’s Capital 30,000 X 5
100

Interest on Q’s Capital = 1,500/-

Interest on R’s Capital 30,000 X 5
100

Interest on R’s Capital  = 1,500 /-

*2: -Calculation of share of profit of P’s, Q’s, & R’s
Net Profit after interest & Salary = 16,000
Distribution of first Rs 10,000 in the Capital Ratio i.e. 50:30:20

Profit share of P = 10,000 X 50/100
Profit share of P = 5,000/-
Profit share of Q
= 10,000 X 30/100
Profit share of Q = 3,000/-
Profit share of R = 10,000 X 20/100
Profit share of R = 2,000/-

Distribution of remaining profit in the ratio of 1:1:1
Remaining Profit available for distribution = Rs 16,000 − 10,000 = Rs 6,000

Profit share of P = 6,000 X 1/3
Profit share of P = 2,000/-
Profit share of Q
= 6,000 X 1/3
Profit share of Q = 2,000/-
Profit share of R = 6,000 X 1/3
Profit share of R = 2,000/-

Total Profit share of P = 5,000 + 2,000 = Rs 7,000
Total Profit share of Q = 3,000 + 2,000 = Rs 5,000
Total Profit share of R = 2,000 + 2,000 = Rs 4,000


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 49 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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