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Question 50 Chapter 2 of +2-A
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50. A, B and C are partners sharing profits and losses in the ratio of A 1/2, B 3/10, C 1/5 after providing for interest @ 5% on their respective capitals, viz., A 50,000; B 30,000 and C 20,000 and allowing B and C a salary of 5,000 each per annum. During the year ended 31st March 2019, A has drawn 10,000 and B and C in addition to their salaries have drawn 2,500 and 1,000 respectively. Profit and Loss Account for the year ended 31st March 2019 showed a net profit of 45,000. On 1st April 2018, the balances in the Current Accounts of the partners were A Cr. 4,500; B Cr. 1,500 and C Cr. 1,000. Interest is not charged on Drawings or Current Account balances. Show Partners’ Capital and Current Accounts as at 31st March 2019 after the division of profits in accordance with the partnership agreement.
The solution of Question 50 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 | 45,000 | |||
| A’s Capital A/c | 2,000 | ||||
| B’s Capital A/c | 1,500 | ||||
| C’s Capital A/c | 1,500 | 5,000 | |||
| To B’s Salary A/c | 5,000 | ||||
| To C’s Salary A/c | 5,000 | ||||
| To Profit Transferred to *2 | |||||
| A’s Current A/c | 15,000 | ||||
| B’s Current A/c | 9,000 | ||||
| C’s Current A/c | 6,000 | 30,000 | |||
| 45,000 | 45,000 | ||||
| Partners’ Capital Accounts for the year ended 31st March 2019 | |||||||
| P | Q | R | Particulars | P | Q | R | |
| By Balance B/d | 40,000 | 30,000 | 30,000 | ||||
| To Balance c/d | 40,000 | 30,000 | 30,000 | ||||
| 40,000 | 30,000 | 30,000 | 40,000 | 30,000 | 30,000 | ||
| Partners’ Capital Accounts for the year ended 31st March 2019 | |||||||
| P | Q | R | Particulars | P | Q | R | |
| To Drawing a/c | 10,000 | 7,500 | 6,000 | By Balance B/d | 4,500 | 1,500 | 1,500 |
| By Interest on Capital A/c *1 | 2,500 | 1,500 | 1,000 | ||||
| By Salaries A/c | – | 5,000 | 5,000 | ||||
| By P&L Appropriation A/c*2 | 15,000 | 9,000 | 6,000 | ||||
| To Balance c/d | 12,000 | 9,500 | 7,000 | ||||
| 22,000 | 17,000 | 13,000 | 22,000 | 17,000 | 13,000 | ||
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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 A’s Capital | = | 50,000 | X | 5 |
| 100 |
Interest on A’s Capital = 2,500/-
| Interest on B’s Capital | = | 30,000 | X | 5 |
| 100 |
Interest on B’s Capital = 1,500/-
| Interest on C’s Capital | = | 20,000 | X | 5 |
| 100 |
Interest on C’s Capital = 1,000 /-
*2: -Calculation of share of profit of P’s, Q’s, & R’s
Net Profit after interest & Salary = 30,000
Distribution of profit in the ratio of 5:3:2
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| Profit share of A | = | 30,000 X 5/10 |
| Profit share of A | = | 15,000/- |
| Profit share of B | = | 30,000 X 3/10 |
| Profit share of B | = | 9,000/- |
| Profit share of C | = | 30,000 X 2/10 |
| Profit share of C | = | 6,000/- |
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)
- 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
