Advertisement
Question 75 Chapter 2 of +2-A
Advertisement
75. X and Y are partners sharing profits and losses in the ratio of 3: 2. They employed Z as their Manager to whom they paid a salary of 7,500 per month. Z had deposited 2,00,000 on which interest was payable 9% p.a. At the end off the accounting year i. e. , 31st March 2018 2017-18 after the division of the year′s profits, it was decided that Z should be treated as a partner
with effect from 1st April 2014 with 1/6th share of profits, his deposit being considered as capital carrying interest @ 6% p.a. like capitals of other partners. The firm’s profits and losses after allowing interest on capitals were –
2014-15: Profit 5,90,000; 2015-16: Profit 6,26,000; 2016-17: Loss 40,000 and 2017-18: Profit 7,80,000.
Record necessary journal entries to give effect to the above.
The solution of Question 75 Chapter 2 of +2-A:
| Date | Particulars | L.F. | Debit | Credit | |
| Z’s Loan A/c | Dr | 2,00,000 | |||
| To Z’s Capital A/c | 2,00,000 | ||||
| (Being balance of Z’s Loan account transferred to his capital account) | |||||
| X’s Capital A/c | Dr | 3,600 | |||
| Y’s Capital A/c | Dr | 2,400 | |||
| To Z’s Capital A/c | 6,000 | ||||
| (Being the excess amount of interest credited to Z’s ) | |||||
Working Note: –
#1 Profit before Z’s Salary and Interest on Z’s Loan.
| Particulars | 2012-13 | 2013-14 | 2014-15 | 2015-16 | Total |
| Profit/Loss for the year | 5,90,000 | 6,26,000 | (-) 40,000 | 7,80,000 | 19,56,000 |
| Add: Z’s Salary Add: Interest on Z’s loan | 90,000 | 90,000 | 90,000 | 90,000 | 3,60,000 |
| Add: Drawings During the year | 18,000 | 18,000 | 18,000 | 18,000 | 72,000 |
| Profit before Z’s Salary and Interest on Z’s Loan | 6,98,000 | 7,34,000 | 68,000 | 8,88,000 | 23,88,000 |
*2 Calculation of Actual Amount of Interest on Z’s Capital
Interest on Capital = Opening Capital X Rate of Interest
| Interest on Z’s Capital | = | 2,00,000 | X | 5 |
| 100 |
Advertisement-X
Interest on Z’s Capital = 12,000/- per year
| Interest on Z’s Capital for 4 year | = | 12,000 X 4 |
| = | 48,000/- |
*3 Calculation of Z’s Share of Profit as a Partner
| Profit after Interest on Z’s Capital | = | Profit before Interest on Z’s Capital l − Interest on Z’s Capital |
| = | 23,88,000 – 48,000 | |
| Profit after Interest on Z’s Capital | = | 23,40,000/- |
Z’s Profit Share as a Partner for 4 years
| Interest on Z’s Capital for 4 year | = | 23,40,000X | 1 | ||
| 6 | |||||
| = | 3,90,000/- | ||||
Z’s Share of Interest on Capital and Profit Share as a Partner
| = | 48,000 +3,90,000 | |
| = | 4,38,000/- |
Advertisement-Y
Z’s Salary and Interest on Loan as Manager
| = | 72,000+3,60,000 | |
| = | 4,32,000/- |
| Adjustment of Z’s share of Profit | = | Z’s Share as a Partner | + | Z’s share as Manager |
| = | 4,38,000 | + | 4, 32, 000 | |
| = | 6,000/- |
Profit to be transferred by X and Y in favour of Z
| X’s Capital | = | 6,000 | X | 3 | = | 3,600/- |
| 5 |
Advertisement-X
| Y’s Capital | = | 6,000 | X | 2 | = | 2,400/- |
| 5 |
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
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
