**Question 56 Chapter 2 of +2-A**

56. X and Y entered into a partnership on 1st April 2017. Their capitals as on 1st April, 2018 were 2,00,000 and 1,50,000 respectively. On 1st October 2018, X gave 50,000 as a loan to the firm. As per the provisions of the partnership deed:

- 20% of Profits before charging interest on Drawings but after making appropriations to be transferred to General Reserve.
- Interest on capital at 12% p.a. and Interest on Drawings @ 10% p.a.

X to get a monthly salary of 5,000 and Y to get the salary of 22,500 per quarter. - X is entitled to a commission of 5% on sales. Sales for the year were 3,50,000.
- Profit to be shared in the ratio of their capitals up to 1,75,000 and balance equally.
- Profit for the year ended 31st March 2019 before allowing or charging interest was 4,61,000. The drawings of X and Y were 1,00,000 and 1,25,000 respectively.

The solution of Question 56 Chapter 2 of +2-A

:

Profit and Loss Appropriation Account for the year ended 31st March 2019 |
||||||

Expenditure |
Amount |
Income |
Amount |
|||

To Interest on Capital A/c *1 | By Profit and Loss A/c | 4,59,500 | ||||

X’s Capital A/c | 24,000 | |||||

Y’s Capital A/c | 18,000 | 42,000 | ||||

To Commission to Y A/c *2 | 17,500 | |||||

To X’s Salary A/ c (5,000 ×12) | 60,000 | |||||

To Y’s Salary A/c (5,000 ×12) | 90,000 | |||||

To Reserve A/c *3 | 50,000 | |||||

To Profit Transferred to *4 |
||||||

X’s Current A/c |
1,18,125 |
|||||

Y’s Current A/c |
93,125 |
2,11,250 |
||||

4,59,500 |
4,59,500 |

Partners’ Capital Accountsfor the year ended 31st March 2019 |
|||||

Particulars |
X |
Y |
Particulars |
X |
Y |

To Drawings A/c | 1,00,000 | 1,25,000 | By Balance B/d | 2,00,000 | 1,50,000 |

To Interest on Drawings A/c | 5,000 | 6,250 | By Interest on Capital A/c *1 | 24,000 | 18,000 |

By Salaries A/c | 60,000 | 90,000 | |||

By Commission A/c *2 | 17,500 | – | |||

By P&L Appropriation A/c*4 | 1,18,125 | 93,125 | |||

To Balance c/d |
3,14,625 |
2,19,875 |
|||

4,19,625 |
3,51,125 |
4,19,625 |
3,51,125 |

**Working Note: –**

***1 Calculation of Interest on X’s, Y’s, & Cherry’s Capital**

Interest on Capital = Opening Capital X Rate of Interest

Interest on X’s Capital | = | 2,00,000 | X | 5 |

100 |

**Interest on X’s Capital = 24,000/-**

Interest on Y’s Capital | = | 1,50,000 | X | 5 |

100 |

Interest on Y’s Capital = **18,000/- **

***2 Calculation of Commission to X**

Commission to X | = | 5% on Sales |

Sales | = |
3,50,000 |

Commission to X | = | Sales | X | Rate |

100 |

Commission to X | = | 3,50,000 | X | 5 |

100 |

**Commission to X = 17,500/-**

***3 Calculation of Amount to be transferred to Reserve**

Amount for Reserve | = | 10% of Divisible Profit |

Divisible Profit | = |
Profit – Interest on Capital – Partners’ Commission – Partners’ Salary |

= |
4,59,500 − 42,000 −17,500 − 60,000 − 90,000= Rs = 2,50,000 |

Amount of Reserve | = | 2,50,000 | X | 20 |

100 |

**Amount of Reserve = 50,000/-*4 Calculation of Interest on X’s, Y’s, & Cherry’s Drawing**

Interest on Drawing = Total Drawing X Rate of Interest X Period

Interest on X’s Drawing | = | 1,00,000 | X | 10 | X | 6 |

100 | 12 |

**Interest on X’s Drawing = 5,000/-**

Interest on Y’s Drawing | = | 1,25,000 | X | 10 | X | 6 |

100 | 12 |

**Interest on Y’s Drawing = 6,250/-**

***5: -Calculation of share of profit of X’s & Y’sNet Profit after interest & Salary = 2,11,250Distribution of first Rs 1,75,000 in the Capital Ratio 2,00,000 : 1,50,000 i.e. 4 : 3**

Profit share of X | = | 1,75,000 X 4/7 |

Profit share of X | = |
1,00,000/- |

Profit share of Y | = |
1,75,000 X 3/7 |

Profit share of Y | = |
75,000/- |

**Distribution of remaining profit in the ratio of 1:1Remaining Profit available for distribution = Rs 2,11,250 − 1,75,000 = Rs 36,250**

Profit share of X | = | 36,250 X 1/2 |

Profit share of X | = |
18,125/- |

Profit share of Y | = |
36,250 X 1/2 |

Profit share of Y | = |
18,125/- |

**Total Profit Share of X = 1,00,000 + 18,125 = Rs 1,18,125****Total Profit Share of Y = 75,000 + 18,125 = Rs 93,125**

Also, Check out the solved question of previous Chapters: –

The Content covered in this article:

- T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms) (adsbygoogle = window.adsbygoogle || []).push({});
- T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

**T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)**

**Chapter No. 1 – Financial Statement of Not-For-Profit Organisations****Chapter No. 2 – Accounting for Partnership Firms – Fundamentals****Chapter No. 3 – Goodwill: Nature and Valuation****Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners****Chapter No. 5 – Admission of a Partner****Chapter No. 6 – Retirement/Death of a Partner****Chapter No. 7 – Dissolution of a Partnership Firm**

**T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)**

**Chapter No. 8 – Company Accounts – Accounting for Share Capital****Chapter No. 9 –****Company Accounts – Issue of Debentures****Chapter No. 10 – Redemption of Debentures**

### T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

**Cha****pter No. 1 – Financial Statements of a Company****Chapter No. 2 – Financial Statement Analysis****Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements****Chapter No. 4 – Accounting Ratios****Chapter No. 5 – Cash Flow Statement**

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