Question 52 Chapter 2 of +2-A
52. Amal, Bimal and Kamal are three partners. On 1st April, 2018, their Capitals stood as: Amal
40,000, Bimal 30,000 and Kamal 25,000. It was decided that:
a they would receive interest on Capital @ 5% p.a.,
b Amal would get a salary of 250 per month,
c Bimal would receive commission @ 4% on net profit after deducting commission, interest on capital and salary, and
d After deducting all of these 10% of the profit should be transferred to the General Reserve. Before the above items were taken into account, net profit for the year ended 31st March, 2019 was 33,360. Prepare Profit and Loss Appropriation Account and the Capital Accounts of
the Partners.
The solution of Question 52 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 | 33,360 | |||
| Amal’s Capital A/c | 2,000 | ||||
| Bimal’s Capital A/c | 1,500 | ||||
| Kamal’s Capital A/c | 1,250 | 4,750 | |||
| To Amal’s Salary A/c | 12,000 | ||||
| To Commission to Bimal A/c *2 | 985 | ||||
| To General Reserve A/c *3 | 2,462 | ||||
| To Profit Transferred to *4 | |||||
| Amal’s Current A/c | 7,388 | ||||
| Bimal’s Current A/c | 7,388 |
||||
| Kamal’s Current A/c | 7,387 | 22,163 | |||
| 33,360 | 33,360 | ||||
| Partners’ Capital Accounts for the year ended 31st March 2019 |
|||||||
| Particulars | Amal | Bimal | Kamal |
Particulars |
Amal | Bimal | Kamal |
| By Balance B/d | 40,000 | 30,000 | 25,000 | ||||
| By Interest on Capital A/c *1 | 2,000 | 1,500 | 1,250 | ||||
| By Salaries A/c | 3,000 | – | – | ||||
| By Commission A/c *2 | – | 985 | – | ||||
| By P&L Appropriation A/c*4 | 7,388 | 7,388 | 7,387 | ||||
| To Balance c/d | 52,388 | 39,873 |
33,637 |
||||
| 52,388 | 39,873 |
33,637 |
52,388 | 39,873 |
33,637 |
||
Working Note: –
*1 Calculation of Interest on Amal’s, Bimal’s, & Kamal’s Capital
Interest on Capital = Opening Capital X Rate of Interest
| Interest on Amal’s Capital | = | 40,000 | X | 5 |
| 100 |
Interest on Amal’s Capital = 2,000/-
| Interest on Bimal’s Capital | = | 30,000 | X | 5 |
| 100 |
Interest on Bimal’s Capital = 1,500/-
| Interest on Kamal’s Capital | = | 25,000 | X | 5 |
| 100 |
Interest on Kamal’s Capital = 1,250 /
*2 Calculation of Commission to Bimal
Net Profit after interest & Salary = 30,000
Distribution of profit in the ratio of 5:3:2
| Commission to Bimal | = | 4% on Net Profits after Commission |
| Profit after expenses | = | Profit – Interest on Capital – Salaries to Partners |
| = | 33,360 – 4,750 – 3,000 = Rs 25,610 |
| Amount of Reserve | = | Profit after expenses | X | Rate |
| 100 + Rate |
| Amount of Reserve | = | 25,610 | X | 4 |
| 104 |
Amount of Reserve = 985/-
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*3 Calculation of Amount to be transferred to Reserve
| Amount for Reserve | = | 10% of Divisible Profit |
| Divisible Profit | = | Profit + Interest on Drawings − Interest on Capital |
| = | 33,360 – 4,750 – 3,000 – 985 = Rs 24,625 |
| Amount of Reserve | = | 24,625 | X | 10 |
| 100 |
Amount of Reserve = 24,62/-
*4: -Calculation of share of profit of Amal’s, Bimal’s, & Kamal’s
Net Profit after interest & Salary = 22,163
Distribution of remaining profit in the ratio of 1:1:1
| Profit share of Amal | = | 22,163 X 1/3 |
| Profit share of Amal | = | 7,388/- |
| Profit share of Bimal | = | 22,163 X 1/3 |
| Profit share of Bimal | = | 7,388/- |
| Profit share of Kamal | = | 22,163 X 1/3 |
| Profit share of Kamal | = | 7,387/- |
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
