Question 7 Chapter 2 of Class 12 Part - 1 VK Publication

Question 7 Chapter 2 of Class 12 Part – 1

Table of Contents

The solution of Question 7 Chapter 2 of Class 12 Part – 1: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

7. Chikki and Dinky were partners in a firm sharing profits in the ratio of 5:3. Their fixed capitals on 1-4-2017 were: Arun Rs. 1,02,000 and Arora Rs. 1,36,000. They agreed to allow interest on capital @ 12% p.a. and to charge on drawings @ 15% pa. The profit of the firm for the year ended 31-3-2018 before all above adjustments was Rs. 40,000. The drawings made by Chikki were Rs. 3,400 and by Dinky Rs. 6,800 during the year. Prepare Profit and Loss Appropriation Account of Chikki and Dinky. Show your calculations clearly. The interest on capital will be allowed even if the firm incurs loss:

The solution of Question 7 Chapter 2 of Class 12 Part – 1: –

Profit and Loss Appreciation Account

(For the year ended 31st March, 2018)

Particulars		Amount	Particulars		Amount
To Interest on Capital A/c:			By Profit and Loss A/c (Net Profit)		40,000
Chikki	12,240
Dinky	16,320	28,560	By Interest on Drawings
To Profit Transferred To Capital A/C’s			Chikki	255
Chikki	7,628		Dinky	510	765
Dinky	4,577	12,205
		40,765			40,765

Working Notes:
1. Interest on Capital:
Chikki- 1,02,000 ×12/100 = Rs. 12,240
Dinky – 1,36,000 ×12/100 = Rs. 16,320
2. Interest on Drawings:
Chikki – 3,400 ×(15×6)/(100×12) = Rs. 255
Dinky – 6,800 ×(15×6)/(100×12) Rs. 510

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