Question 65 Chapter 2 of +2-A - T.S. Grewal 12 Class Part

Question 65 Chapter 2 of +2-A

Table of Contents

The solution of Question 65 Chapter 2 of +2-A:

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

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

65. Piya and Bina are partners in firm sharing profits and losses in the ratio of 3 : 2. Following

Liabilities			Assets
Capitals:			Sundry Assets	1,20,000
Piya	80,000
Bina	40,000	1,20,000
		1,20,000		1,20,000

The profits 30,000 for the year ended 31st March 2016 were divided between the partners without allowing interest on capital @ 12% p.a. salary to Piya @ 1,000 per month. During the year Piya withdrew 8,000 and Bina withdrew 4,000. Showing your working notes clearly, pass the necessary rectifying entry.

The solution of Question 65 Chapter 2 of +2-A:

Date	Particulars		L.F.	Debit	Credit
	Bina’s Capital A/c	Dr		5,856
	To Piya’s Capital A/c				5,856
	(Being adjustment of Interest on partners′ capital made)

Working Note: –

Statement Showing Adjustment of Profit required
Particulars	Amount of Mohan’s Capital	Amount of Vijay’s Capital
Capital at the end	80,000	40,000
Less: Profit already Distributed (1:1:1)	18,000	12,000
Add: Drawings During the year	8,000	4,000
Capital at the beginning	70,000	32,000

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Statement Showing Adjustment of Profit required
Particulars	Piya	Bina	Total
Actual Amount of Interest on Capital @12% p.a.	8,400	3,840	12,240
Add: – Salary 1000 X 12months	12,000	–	12,000
Actual Amount to be credited	20,400	3,840	24,240
Less: wrongly Amount credited in Profit sharing ratio i.e. 3:2	14,544	9,696	24,240
	5,856	– 5,856	–
	Piya get less amount, so we have to credit his capital a/c with difference amount	Bina get extra so we have to debit his capital a/c with difference amount

Calculation of Actual Amount of Interest on Piya’s & Bina’s Capital
Interest on Capital = Opening Capital X Rate of Interest

Interest on Piya’s Capital	=	70,000	X	12
				100

Interest on Piya’s Capital = 8,400/-

Interest on Bina’s Capital	=	32,000	X	12
				100

Interest on Bina’s Capital = 3,840/-

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. 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)

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

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