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

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)

• 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