Question 56 Chapter 2 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 56 Chapter 2 of +2-A

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:

  1. 20% of Profits before charging interest on Drawings but after making appropriations to be transferred to General Reserve.
  2. 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.
  3. X is entitled to a commission of 5% on sales. Sales for the year were 3,50,000.
  4. Profit to be shared in the ratio of their capitals up to 1,75,000 and balance equally.
  5. 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 Accounts
     for 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’s
Net Profit after interest & Salary = 2,11,250
Distribution 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 1:1
Remaining 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: –

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)

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

  • Chapter 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

2 Book 1 min - Question 56 Chapter 2 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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