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Question 56 Chapter 2 of +2-Part-1
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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 A/c | |||||
| Particulars | Amount | Particulars | Amount | ||
| To Interest on capital – Thread @10% | 6,000 | By net profit | 83,000 | ||
| -Needle @10% | 10,000 | 16,000 | |||
| 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 | |||
| 83,000 | 83,000 | ||||
| Partners’ Capital A/c | |||||||
| Particulars | Thread | Needle | Particulars | Thread | Needle | ||
| By Balance B/d | 60,000 | 1,00,000 | |||||
| To Balance c/d | 60,000 | 1,00,000 | |||||
| 60,000 | 1,00,000 | 60,000 | 1,00,000 | ||||
| Partners’ Current 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: –
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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 (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- 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
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
