Question 51 Chapter 2 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 51 Chapter 2 of +2-A

Question 51 Chapter 2 of +2-A

51. Ali the Bahadur are partners in firm sharing profits and losses as Ali 70% and Bahadur 30%. Their respective capitals as at 1st April 2018 stand as Ali 25,000 and Bahadur 20,000. The partners are allowed interest on capitals @ 5% p.a. Drawings of the partners during the year ended 31st March 2019 amounted to 3,500 and 2,500 respectively. Profit for the year, before charging interest on capital and annual salary of Bahadur @ 3,000, amounted to 40,000, 10% of divisible profit is to be transferred to Reserve.
You are asked to show Partners’ Current Account and Capital Accounts recording the above transactions.

 

The solution of Question 51 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 *2     By Profit and Loss A/c   40,000
Ali’s Capital A/c 1,250        
Bahadur’s Capital A/c 1,000 2,250      
To Reserve A/c *3   3,475      
To Bahadur’s Salary A/c   3,000      
To Profit Transferred to *4          
Ali’s Current A/c 21,892        
Bahadur’s Current A/c 9,383 31,275      
    40,000     40,000

 

Partners’ Capital Accounts
for the year ended 31st March 2019
Particulars Ali Bahadur Particulars
Ali Bahadur
      By Balance B/d 25,000 20,000
To Balance c/d 25,000 20,000      
  25,000 20,000   25,000 20,000

 

Partners’ Capital Accounts
for the year ended 31st March 2019
Particulars Ali Bahadur Particulars
Ali Bahadur
To Drawing a/c 3,500 2,500 By Interest on Capital A/c *1 1,250 1,000
      By Salaries A/c 3,000
      By P&L Appropriation A/c*2 21,892 9,383
To Balance c/d 19,642 10,883
     
  23,142 13,383
  23,142 13,383

 

Working Note: –

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

Interest on Ali’s Capital 25,000 X 5
100

Interest on Ali’s Capital = 1,250/-

Interest on Bahadur’s Capital 20,000 X 5
100

Interest on Bahadur’s Capital = 1,000/-

*3 Calculation of Amount to be transferred to Reserve
Net Profit after interest & Salary = 30,000
Distribution of profit in the ratio of 5:3:2

Amount for Reserve = 10% of Divisible Profit
Divisible Profit  = Profit − Interest on Capital – C’s Salary
  = 40,000 – 2,250 -3,000 = Rs 34,750
X 3/10

 

Amount of Reserve 34,750 X 10
100

Amount of Reserve = 3,475/-

*4: -Calculation of share of profit of Ali’s & Bahadur’s
Net Profit after interest & Salary = 31,275
Distribution of profit in the ratio of 70:30


Profit share of Ali = 31,275 X 70/100
Profit share of Ali = 21,892/-
Profit share of Bahadur = 31,275 X 70/100
Profit share of Bahadur = 9,383/-


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 51 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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