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

Question 55 Chapter 2 of +2- Part-
Q-55 - CH-2 - Usha +2 Book 2018 - Solution

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Question 55 Chapter 2 of +2-Part-1

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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:

  
BlackRs.12,000 (Dr.)
WhiteRs.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 App. A/c
Particulars
AmountParticulars
Amount
To Interest on capital – Black @10%7500 By net profit (1,10,000-25,000 manager’s salary) 85,000
-White @10%500012,500By interest on drawings: (WN2)  
To Salaries – Black (1500 X 12) 18,000-Black(20,000 X 12% X 6/12)1,200 
To Contingency Reserve a/c (WN1) 2,690-White(12,000 X 12% X 6½ /127801,980
      
To Net profit transferred to Capital a/cs     
– Black 2/3 35,860    
– White 1/3 17,93053,790   
  86,980  86,980

 

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Partners’ Capital A/cs
Particulars
BlackWhiteParticulars
BlackWhite
    By Balance B/d 75,00050,000
To Balance c/d  75,00050,000    
  75,00050,000  75,00050,000

 

Partners’ Current A/cs
Particulars
BlackWhiteParticulars
BlackWhite
To Balance b/d 12,000By Balance B/d 5,000
To Drawings A/c 20,00012,000By Interest on Capital A/c 7,5005,000
To interest on Drawings A/c 1200780By Salary 18,000
    By P&L Appropriation A/c 35,86017,930
To Balance c/d  28,16015,150    
  61,36027,930  61,36027,930

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

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

 

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

+2 Book 1-min
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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