Question 73 Chapter 2 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question No.73 Chapter No.2 T.S. Grewal 2 Book 2019 Solution min min 1024x576 - Question 73 Chapter 2 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1

Question 73 Chapter 2 of +2-A

73. Capitals of A, B and C as on 31st March, 2019 amounted to 90,000, 3,30,000 and 6,60,000
respectively. Profit of 1,80,000 for the year ended 31st March 2019 was distributed in the
ratio of 4: 1: 1 after allowing interest on Capital @ 10% p.a. During the year, each partner withdrew 3,60,000. The Partnership Deed was silent as to profit-sharing ratio but provided for
interest on capital @ 12%.
Pass the necessary adjustment entry showing the working clearly.

 

 

The solution of Question 73 Chapter 2 of +2-A

:

Date Particulars
L.F. Debit Credit
  A’s Capital A/c Dr   66,600  
  To B’s Capital A/c       30,000
  To C’s Capital A/c       36,600
  (Being adjustment made)        

 


Working Note: –

 

Statement Showing Adjustment of Profit required
Particulars Amount of A’s Capital

Amount of B’s Capital

Amount of C’s Capital

Capital at the end 90,000 3,30,000 6,60,000
Less: Profit already
Distributed (4:1:1)
1,20,000 30,000 30,000
Add: Drawings During the year 3,60,000 3,60,000 3,60,000
Capital at the beginning 3,30,000 6,60,000 9,90,000

 

Statement Showing Adjustment of Profit required
Particulars A B C Total
Actual Amount of Interest on Capital @6% p.a. *2 39,600 79,200 1,18,800 2,37,600
Add: – Actual amount of Profit share to be credited 1:1:1 *3 46,800 46,800 46,800 1,40,400
Less: – wrongly credited amount of interest on capital *4 -33,000 -66,000 -99,000 -1,98,000
Less: – wrongly credited amount of share of profit 4:1:1 *5 -1,20,000 -30,000 – 30,000 -1,80,000
  – 66,600 30,000 36,600
 

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

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

 

C get extra so we have to debit 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 A’s Capital 3,30,000 X 12
100

Interest on A’s Capital = 33,000/-

Interest on B’s Capital 6,60,000 X 12
100

Interest on B’s Capital = 66,000/-

Interest on C’s Capital 9,90,000 X 12
100

Interest on C’s Capital = 99,000/-

*3 Calculation of the Wrong Amount of Interest on A’s, B’s, & C’s Capital

Interest on Capital = Opening Capital X Rate of Interest

Interest on A’s Capital 3,30,000 X 10
100

Interest on A’s Capital = 33,000/-

Interest on B’s Capital 6,60,000 X 10
100

Interest on B’s Capital = 66,000/-

Interest on C’s Capital 9,90,000 X 10
100

Interest on C’s Capital = 99,000/-

*4: -Actual distribution of the share of profit among the partners’

Net Profit after Actual interest on capital = Net Profit + Wrong Int. on Cap. + actual Int. on Cap.
  = 1,80,000 + 1,98,000 – 2,37,600
  = 1,40,400

Distribution of profit in Ratio 1: 1: 1 (because the deed is silent amount profit sharing ratio.)

Profit share of A = 1,40,400 X 1/3
Profit share of A = 46,800/-
Profit share of B = 1,40,400 X 1/3
Profit share of B = 46,800/-
Profit share of C = 1,40,400 X 1/3
Profit share of C = 46,800/-

 

*5: -Wrong distribution of the share of profit among the partners’

Net Profit after interest & Salary = 1,80,000
Distribution of profit in Ratio 4 : 1: 1

Profit share of A = 1,80,000 X 4/6
Profit share of A = 1,20,000/-
Profit share of B = 1,80,000 X 1/6
Profit share of B = 30,000/-
Profit share of C = 1,80,000 X 1/6
Profit share of C = 30,000/-

 

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 73 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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