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:
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.
The solution of Question 55 Chapter 2 of +2 Part-1: –
|Profit and Loss Account A/c
|To Interest on capital – Black @10%||7500||By net profit (1,10,000-25,000 manager’s salary)||85,000|
|-White @10%||5000||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|
|Partners’ Capital A/cs|
|By Balance B/d||75,000||50,000|
|To Balance c/d||75,000||50,000|
|Partners’ Current A/cs|
|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|
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 (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- 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
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement