Question 55 Chapter 2 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 55 Chapter 2 of +2- Part-

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.

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

 

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 1 min - Question 55 Chapter 2 of +2 Part-1 - USHA Publication  12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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