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Question 71 Chapter 2 of Class 12 Part – 1 VK Publication

Question 71 Chapter 2 of Class 12 Part - 1 VK Publication
Question 71 Chapter 2 of Class 12 Part - 1 VK Publication

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Question 71 Chapter 2 of Class 12 Part – 1

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71. The capital accounts of Akhil and Nikhil stood at Rs. 42,000 and Rs. 32,000 respectively after the necessary adjustments in respect of the drawings and the net profit for the year. It was subsequently ascertained that interest on capital and on drawings @5% p.a. were not taken into account in arriving at the net profit. The drawings of partners had been: Akhil Rs. 1,200 drawn at the end of each quarter and Nikhil Rs. 1,800 drawn at the end of each half year.
The profit for year ended 31st March, 2017 as adjusted amounted to Rs. 22,000. The partners share profits in proportion of Akhil 3/5 and Nikhil 2/3. You are required to pass necessary journal entry and to show the adjusted capital accounts of the partners.

The solution of Question 71 Chapter 2 of Class 12 Part – 1: –

For the calculation of interest on capital, opening capitals of the partnershave to be calculated.

Statement Showing calculation of opening capital

Particulars M Rs.N Rs.
Capital at the end42,00032,000
Add: Drawings made during the year4,8003,600
Less: Share of Profit(13,200)(8,800)
Opening capitals33,60026,800

Interest on Capitals:
Akhil = 33,600 ×5/100= Rs. 1,680
Nikhil = 26,800 ×5/100= Rs. 1,340
Interest on Akhil’s Drawings by Product Method:

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Product Method

Date Rs.Product monthsProduct ₹ (Amount X months)
At end of 3 months1,200910,800
At end of 6 months1,20067,200
At end of 9 months1,20033,600
At end of 12 months1,20000
Total of Products  21,600

Interest on Drawings = Total Drawings×Rate/100×1/12
= 21,600 ×5/100×1/12 = Rs. 90
Interest on Akhil’s Drawings by Product Method:

Product Method

Date Rs.Product monthsProduct ₹ (Amount X months)
At end of 6 months1,800610,800
At end of 12 months1,80000
Total of Products  10,800

Interest on Drawings = Total Drawings×Rate/100×1/12
= 10,800 ×5/100×1/12 = Rs. 45

Table Adjustment 

Particulars 

Akhil Rs.

 Nikhil  Rs. 

Total Rs.
Interest on Capital A/c1,6801,3403,020
Less: Interest on Drawings9045135
(Cr.) (A)1,5901,2952,885
Less: Net loss of the firm ( Rs. 2,885 in the ratio of 3:2) (Dr.) (B)1,7311,1542,885
Net Effect (A-B)( Dr.) 141(Cr.) 141NIL

Adjustment Journal Entry

Date Particular L . F
 
Dr. ₹Cr. ₹
 Akhil’s Capital A/cDr. 141 
 To Nikhil’s Capital A/c   141
 (Being partners’ capital account adjusted for interest on capital and drawings )    

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Partners Adjusted Capital Account

ParticularAkhil NikhilParticular AkhilNikhil
To Nikhil’s Capital A/c141By Balance b/d42,00032,000
To Balance c/d41,85932,141By Akhil’s Capital A/c141

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Also, Check out the solved question of all 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)

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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)

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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

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Chapter No. 5 – Cash Flow Statement

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

+2 Book 1-min
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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