Question 55 Chapter 2 of +2-Part-1
55. (P/L appropriation a/c, Partners fixed accounts) Black and White have capital of Rs. 75,000 and Rs.50,000 respectively on 1st April, 2016. They share profits in the ratio of 2:1.
The firm has to transfer 5% of net divisible profits for the cost of a pending law suit. Manager of the firm is to get salaries Rs.25,000. The position of the current accounts is as follows:
| Black | Rs.12,000 (Dr.) |
| White | Rs.5,000 (Cr.) |
Interest on opening capital account is allowed @10% p.a. Black withdraws Rs.20,000 during the year, while White withdraws Rs.1,000 p.m. on the first day of every month. Interest on drawings is calculated @12% p.a. Business earned profits of Rs.1,10,000 during the year before the manager’s salary. Black is to be paid salary @Rs.1500 p.m.
Distribute the profit between Black and White and show the partners capital account and current account.
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The solution of Question 55 Chapter 2 of +2 Part-1: –
| Profit and Loss Account A/c |
|||||
| Particulars |
Amount | Particulars |
Amount | ||
| To Interest on capital – Black @10% | 6,000 | By net profit (1,10,000-25,000 manager’s salary) | 85,000 | ||
| -White @10% | 4,500 | 12,500 | By interest on drawings: (WN2) | 3,000 | |
| To Salaries – Black (1500*12) | 18,000 | -Black(20,000*12%*6/12) | 1,200 | ||
| To Contingency Reserve a/c (WN1) | 2,690 | -White(12,000*12%* 6½ /12 | 780 | 1,980 | |
| To Net profit transferred to Capital a/cs | |||||
| – Black 2/3 | 35,860 | ||||
| – White 1/3 | 17,930 | 53,790 | |||
| 86,980 | 86,980 | ||||
| Profit and Loss Account A/c |
|||||||
| Particulars |
Black | White | Particulars |
Black | White | ||
| By Balance B/d | 75,000 | 50,000 | |||||
| To Balance c/d | 75,000 | 50,000 | |||||
| 75,000 | 50,000 | 75,000 | 50,000 | ||||
| Profit and Loss Account A/c |
|||||||
| Particulars |
Black | White | Particulars |
Black | White | ||
| To Balance b/d | 12,000 | – | By Balance B/d | – | 5,000 | ||
| To Drawings A/c | 20,000 | 12,000 | By Interest on Capital A/c | 7,500 | 5,000 | ||
| To interest on Drawings A/c | 1200 | 780 | By Salary | 18,000 | – | ||
| By P&L Appropriation A/c | 35,860 | 17,930 | |||||
| To Balance c/d | 28,160 | 15,150 | |||||
| 61,360 | 27,930 | 61,360 | 27,930 | ||||
Working Note: –
1. Contingency Reserve (for a pending lawsuit)
5% on net divisible profits means after charging this contingency reserve:
86,980-(12500+18,000) = 56480*5/105 =2690(approx.)
2. Interest on Black’s drawings to be charged for half year only as date of drawings are not mentioned.
Interest on White’s Drawings are charged for 6½ months as drawings are made equally throughout the year on first day of every month.
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Also, Check out the solved question of previous Chapters: –
Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution
- Chapter No. 1 – Accounting Not for Profit Organisations
- Chapter No. 2 – Partnership Accounts – I
- Chapter No. 3 – Partnership Accounts – II (Introduction)
- Chapter No. 4 – Partnership Accounts – III (Goodwill: Nature and Valuation)
- Chapter No. 5 – Partnership Accounts – IV (Reconstitution of Partnership)
- Chapter No. 6 – Partnership Accounts – V (Admission of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Retirement and Death of A Partner)
- Chapter No. 8 – Company Accounts (Share Capital)
- Chapter No. 9 – Company Accounts (Issue of Debentures)
- Chapter No. 10 – Company Accounts (Redemption of Debentures)
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution
- Chapter No. 1 – Financial Statements of a Company (Balance Sheet Only)
- Chapter No. 2 – Techniques of Financial Statement Analysis
- Chapter No. 3 – Ratio Analysis
- Chapter No. 4 – Cash Flow Statement
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