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

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%	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
		86,980			86,980

 

Partners’ Capital A/cs
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

 

Partners’ Current A/cs
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 (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

 

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