Question 56 Chapter 2 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 56 Chapter 2 of +2- Part-

Question 56 Chapter 2 of +2-Part-1

56. (Profit and loss a/c, Partners Capital and Current a/c) Thread, Needle and Button are in partnership and during the year ended 31-3-2017, they earned a profit of Rs.83,000. Thread and Needle are entitled to get 10% p.a. interest on capital of Rs.60,000 and Rs.1,00,000 respectively. Button who has no capital in the firm is entitled to a salary of Rs.12,000 p.a. Button is also entitled to a commission of 10% on the profits after charging interest, salary and commission.
It is further agreed that the balance of profits should be appropriated as to 20% for charity fund and balance is shared equally by Thread and Needle.
Prepare profit and loss appropriation account and partners capital and current account for the year ended 31st March 2017, if the drawings of the partners during the year were Thread- Rs. 8,000; Needle-Rs.6,000 and Button- Rs.9,000.

The solution of Question 56 Chapter 2 of +2 Part-1: – 

 

Profit and Loss Account A/c
Particulars
Amount Particulars
Amount
To Interest on capital – Thread @10% 6,000   By net profit   85,000
-Needle @10% 10,000 12,500      
To Button’s Salary   12,000      
To Button’s Commission (WN1)   5,000      
To Charity Fund (WN2)   10,000      
           
To Net profit transferred to Capital a/cs          
-Thread- 1/2 20,000        
-Needle -1/2 20,000 40,000      
    85,000     85,000

 

Profit and Loss Account A/c
Particulars
Thread Needle Particulars
Thread Needle
        By Balance B/d   30,000 20,000
To Balance c/d   30,000 20,000        
    30,000 20,000     30,000 20,000

 

Profit and Loss Account A/c
Particulars
Thread Needle Button Particulars
Thread Needle Button
To Drawings A/c   8,000 6,000 9,000 By Interest on Capital A/c   6,000 10,000
          By Commission   5,000
          By salary   12,000
          By P&L Appropriation A/c   20,000 20,000  
To Balance c/d   18,000 24,000 8,000
         
    26,000 30,000 17,000
    26,000 30,000 17,000

 

Working Note: –

1. Button’s Commission:

Button’s Commission

= 10% of profits after charging interest, salary and commission
  = 10/110 of (83,000-16,000-12,000)
  = 10/110 of 55,000 = Rs. 5,000
     
2. Charity Fund: = 20% of profits after charging all expenses
  = 20% of ( 83,000-16,000-12,000-5,000)
  = 20% of 50,000 = Rs. 10,000

 


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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
  • Chapter No. 3 – Partnership Accounts – II (Introduction)
  • Chapter No. 4 – Partnership Accounts – III (Goodwill: Nature and Valuation)
  • Chapter No. 5 – Partnership Accounts – IV (Reconstitution of Partnership)
  • Chapter No. 6 – Partnership Accounts – V (Admission of A Partner)
  • Chapter No. 7 – Partnership Accounts – VI (Retirement and Death of A Partner)
  • 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 (Balance Sheet Only)
  • Chapter No. 2 – Techniques of Financial Statement Analysis
  • Chapter No. 3 – Ratio Analysis 
  • Chapter No. 4 – 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 Part-1 - USHA Publication  12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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