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

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 Accountsfor 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 Accountsfor 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)

• 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