Question 70 Chapter 2 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 70 Chapter 2 of +2-A

Question 70 Chapter 2 of +2-A

70. Mudit, Sudhir and Uday are partners in firm sharing profits in the ratio of 3: 1: 1. Their
fixed capital balances are 4,00,000, 1,60,000 and 1,20,000 respectively. Net profit for the
year ended 31st March 2018 distributed amongst the partners was 1,00,000, without taking into account the following adjustments:

  1. Interest on capitals @ 2.5% p.a.;
  2. Salary to Mudit 18,000 p.a. and commission to Uday 12,000.
  3. Mudit was allowed a commission of 6% of divisible profit after charging such commission.
    Pass a rectifying Journal entry in the books of the firm. Show workings clearly.

 

The solution of Question 70 Chapter 2 of +2-A

:

Date Particulars
L.F. Debit Credit
  Sudhir’s Current A/c Dr   6,000  
  To Mudit’s Current A/c       1,000
  To Uday’s Current A/c       5,000
  (Being adjustment made)        

 


Working Note: –

 

 

Statement Showing Adjustment of Profit required
Particulars Mudit

Sudhir

Uday

Total
Actual Amount of Interest on Capital @2.5% p.a. *2 10,000 4,000 3,000 17,000
Add: – Salary 18,000 18,000
Add: – Commission *3 3,000 12,000 15,000
Actual Amount to be credited 31,000 4,000 15,000 50,000
Less: wrongly Amount credited in Profit sharing ratio i.e. 3:2:1 30,000 10,000 10,000 50,000
  1,000 – 6,000  5,0000
 

Mudit get less amount, so we have to credit his capital a/c with difference amount

Sudhir get extra so we have to debit his capital a/c with difference amount

 

Uday gets less amount, so we have to credit his capital a/c with difference amount

 

*2 Calculation of Actual Amount of Interest on A’s, B’s, & C’s Capital
Interest on Capital = Opening Capital X Rate of Interest




Interest on Mudit’s Capital 4,00,000 X 2.5
100

Interest on Mudit’s Capital = 10,000/-

Interest on Sudhir’s Capital 1,60,000 X 2.5
100

Interest on Sudhir’s Capital = 4,000/-

Interest on Uday’sCapital 1,20,000 X 2.5
100

Interest on Uday’sCapital = 3,000/-

*3 Calculation of Commission to C

Commission to Mudit = 5% on Net Profits after Interest on Capital & Salary
Net Profit after Interest on Capital & Salary = 1,00,000 – 17, 000 + 18, 000 + 12, 000 = 53,000
Commission to Mudit Net Profit X Rate
100 + Rate

 

Commission to Mudit 53,000 X 6
100+6

Commission to Mudit = 3,000/-

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)

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

 

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 1 min - Question 70 Chapter 2 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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