Question 53 Chapter 2 of +2-Part-1
53. (Profit and loss appropriation a/c) Ted, Phil and Gordon are in partnership sharing profits two-fifths, two fifths and one-fifth and throughout the half-year ended 31st December 2017 their capital accounts have remained unchanged at Rs.60,000, Rs.40,000 and Rs.30,000 respectively.
Their current account balances on 1st July 2017 were:
| Phil | 8,550 (Dr.) |
| Gordon | 6,550 (Dr.) |
| Ted | 12,000 (Cr.) |
During 2017 Ted withdrew Rs.200 at the beginning of each month, Gordon withdrew Rs.400 at the end of each month while Phil withdrew Rs.1,800 during the period of six months.
Their partnership deed provides that:
1. Partners are allowed interest on capital @5% p.a.
2. Partners are allowed or charged interest on current account balance @4% p.a.
3. Interest on drawings @6% p.a.
4. Gordon is entitled to a salary of Rs.500 per month.
5. Ted is entitled to a commission of 5% of the profits of the firm after charging clauses 1 to 4.
6. Phil is entitled to a commission of 5% of the profits of the firm after charging clauses 1 to 5 and his own commission.
During the half-year ended 2017, the net profit of the firm was Rs.2,07,000 after charging Gordon’s Salary which had been debited to wages and salaries account.
You are required to prepare the profit and loss appropriation account of the firm only.
The solution of Question 53 Chapter 2 of +2 Part-1: –
| Profit and Loss App. A/c |
|||||
| Particulars |
Amount | Particulars |
Amount | ||
| To Interest on capital – Ted | 1,500 | By net profit | 2,07,000 | ||
| -Phil | 1,000 | Add: Gordon’s Salary | 3,000 | 2,10,000 | |
| -Gordon | 750 | 3250 | By Interest on drawings (WN1) | ||
| To Interest on current a/c | – Ted | 21 | |||
| -Ted (12,000*4%*6/12) | 240 | -Phil | 27 | ||
| To Gordon Salary | 3,000 | -Gordon | 30 | 78 | |
| To Commission to Ted (WN2) | 10,195 | By interest on current accounts: | |||
| To Commission to Phil (WN2) | 9,224 | -Phil (8,550*4%*6/12) | 171 | ||
| To Profit: | -Gordon (6,550*4%*6/12) | 131 | |||
| -Ted | 73,788 | ||||
| – Phil | 73,788 | ||||
| -Gordon | 36,895 | 1,84,471 | |||
| 2,10,380 | 2,10,380 | ||||
Working Note: –
1. Calculation of Interest on Drawings :
| Ted : 200 X 6 =1200 X 3 ½ X 6% X 1/12 | 21 |
| Gordon : 400 X 6 =2400 X 2 ½ X 6% X 1/12 | 30 |
| Phil: 1800 X 6% X 3/12 | 27 |
2. Commission:
| Ted’s Commission | = | 5% of profits after charging clauses (A) to (D) |
| = | 5% of ( 2,10,380-3,000-3,250-240) | |
| = | 5% of 2,03,890 = Rs. 10,195 | |
| Phil’s Commission | = | 5% of profits after charging his own commission & clauses (1) to (5) |
| = | 5/(100+5) of ( 2,10,380-3,000-3,250-240-10,195) | |
| = | 5/105 of 1,93,695 = Rs. 9,225 |
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Chapter No. 1 – Accounting Not-for-Profit Organisations (Deleted from the Syllabus)
Chapter No. 2 – Partnership Accounts – I (Introduction)
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