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Question 51 Chapter 7 of +2-A
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51. X, Y and Z entered into partnership on 1st April, 2016. They contributed capital 40,000, 30,000 and 20,000 respectively and agreed to share profits in the ratio of 3 : 2 : 1. Interest on capital was to be allowed @ 15% p.a. and interest on drawings was to be charged at an average rate of 5%. During the two years ended 31st March, 2018, the firm made profit of 21,600 and 25,140 respectively before allowing or charging interest on capital and drawings. The drawings of each partner were 6,000 per year. On 31st March, 2018, the partners decided to dissolve the partnership due to difference of opinion. On that date, the creditors amounted to 20,000. The assets, other than cash 2,000, realised 1,21,000. Expenses of dissolution amounted to 760. Draw up necessary Ledger Accounts to close the books of the firm.
The solution of Question 51 Chapter 7 of +2-A: –
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| Profit and Loss Appropriation for the year ended March 31, 2017 | |||||
| Particular 5 | Amount | Particular | Amount | ||
| Interest on Capital A/c: | Profit and Loss A/c | 21,600 | |||
| X (40,000 × 15%) | 6,000 | Interest on Drawings | |||
| Y (30,000 × 15%) | 4,500 | X (6,000 × 5%) | 300 | ||
| Z (20,000 × 15%) | 3,000 | 13,500 | Y (6,000 × 5%) | 300 | |
| Z (6,000 × 5%) | 300 | 900 | |||
| Profit transferred to: | |||||
| X’s Capital A/c | 4,500 | ||||
| Y’s Capital A/c | 3,000 | ||||
| Z’s Capital A/c | 1,500 | 9,000 | |||
| 22,500 | 22,500 | ||||
| Partners’ Capital Accounts for the year 2016-17 | |||||||
| Part. | X | Y | Z | Part. | X | Y | Z |
| To Drawing A/c | 6,000 | 6,000 | 6,000 | By Cash A/c | 40,000 | 30,000 | 20,000 |
| To Interest on Drawings A/c | 300 | 300 | 300 | By Interest on Capital A/c | 6,000 | 4,500 | 3,000 |
| By P/L Appropriation A/c (WN 3) | 4,500 | 3,000 | 1,500 | ||||
| To Cash A/c | 44,200 | 31,200 | 18,200 | ||||
| 50,500 | 37,500 | 24,500 | 50,500 | 37,500 | 24,500 | ||
| Profit and Loss Appropriation for the year ended March 31, 2018 | |||||
| Particular 5 | Amount | Particular | Amount | ||
| Interest on Capital A/c: | Profit and Loss A/c | 25,140 | |||
| X (40,000 × 15%) | 6,630 | Interest on Drawings | |||
| Y (30,000 × 15%) | 4,680 | X (6,000 × 5%) | 300 | ||
| Z (20,000 × 15%) | 2,730 | 14,040 | Y (6,000 × 5%) | 300 | |
| Z (6,000 × 5%) | 300 | 900 | |||
| Profit transferred to: | |||||
| X’s Capital A/c | 6,000 | ||||
| Y’s Capital A/c | 4,000 | ||||
| Z’s Capital A/c | 2,000 | 12,000 | |||
| 26,040 | 26,040 | ||||
| Partners’ Capital Accounts for the year 2017-18 | |||||||
| Part. | X | Y | Z | Part. | X | Y | Z |
| To Drawing A/c | 6,000 | 6,000 | 6,000 | By Cash A/c | 40,000 | 30,000 | 20,000 |
| To Interest on Drawings A/c | 300 | 300 | 300 | By Interest on Capital A/c | 6,630 | 4,680 | 2,730 |
| By P/L Appropriation A/c | 6,000 | 4,000 | 2,000 | ||||
| To Cash A/c | 50,530 | 33,580 | 16,630 | ||||
| 56,830 | 39,880 | 22,930 | 56,830 | 39,880 | 22,930 | ||
| By Balance b/d | 50,530 | 33,580 | 16,630 | ||||
| By Realization A/c Profit | 750 | 500 | 250 | ||||
| To Cash A/c | 51,280 | 34,080 | 16,880 | ||||
| 51,280 | 34,080 | 16,880 | 51,280 | 34,080 | 16,880 | ||
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| Revaluation Account | |||||
| Particular 5 | Amount | Particular | Amount | ||
| Sundry Assets | 1,18,740 | Creditors | 20,000 | ||
| Cash A/c: | Cash Assets realized | 1,21,000 | |||
| Creditors | 20,000 | ||||
| Expenses | 760 | 20,760 | |||
| Profit transferred to: | |||||
| X’s Capital A/c | 750 | ||||
| Y’s Capital A/c | 500 | ||||
| Z’s Capital A/c | 250 | 1,500 | |||
| 1,41,000 | 1,41,000 | ||||
| Partners’ Capital Accounts | |||||||
| Part. | X | Y | Z | Part. | X | Y | Z |
| By Cash A/c | 50,530 | 33,580 | 16,630 | ||||
| By Realization A/c Profit | 750 | 500 | 250 | ||||
| To Cash A/c | 51,280 | 34,080 | 16,880 | ||||
| 51,280 | 34,080 | 16,880 | 51,280 | 34,080 | 16,880 | ||
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| Cash Account | |||||
| Particular | Amount | Particular | Amount | ||
| Balance b/d | 2,000 | Realization A/c | 20,760 | ||
| Realization A/c | 1,21,000 | ||||
| X’s Capital A/c | 51,280 | ||||
| Y’s Capital A/c | 34,080 | ||||
| Z’s Capital A/c | 16,880 | ||||
| 1,23,000 | 1,23,000 | ||||
Working Note:
| Memorandum Balance Sheet | |||||
| Particular | Amount | Particular | Amount | ||
| Capital A/cs: | Cash | 2,000 | |||
| X’s Capital A/c | 50,530 | Sundry Assets | 1,18,740 | ||
| Y’s Capital A/c | 33,580 | ||||
| Z’s Capital A/c | 16,630 | 1,00,740 | |||
| Creditors | 20,000 | ||||
| 1,20,740 | 1,20,740 | ||||
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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
