Question 84 Chapter 2 of Class 12 Part - 1 VK Publication

Question 84 Chapter 2 of Class 12 Part – 1

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The solution of Question 81 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

84. A, B and C are partners in a firm, sharing profits in the ratio of 2:1:1. It is agreed th interest on capital will be allowed at 5% per annum and interest on drawings will be charged at 4% per annum. (No Interest will be charged or allowed on Current Accounts) The following are the particulars of the Capital, Current and Drawings Accounts of the partners.

	A(Rs.)	B(Rs.)	C(Rs.)
Capital A/c (1st April, 2015)	75,000	40,000	30,000
Current A/c (1st April, 2015)	10,000	5,000	5,000(Dr.)
Drawings	15,000	10,000	10,000
Interest on Drawings (31st March, 2016)	500	190	350

The Profit and Loss Account for the year ended 31st March, 2016 showed a net profit of Rs. 60,000 before taking into account interest on capital and drawings and subject to the following adjustments:
(a) Life insurance premium of A amounting to Rs. 1,000 paid by the firm on 1st January, 2016 has been charged to Miscellaneous Expenditure Account
(b) Travelling expenses of Rs. 3,000 of B for a pleasure trip to Kashmir paid by the firm on 30th September, 2015 has been debited to Travelling Expenses Account.
(c) Repairs to machinery amounting to Rs. 10,000 has been debited to Plant Account and depreciation there on charged @20 %.
Prepare the Profit and Loss Appropriation Account for the year ending 31st March, 2016 and Current Accounts of the partners for the year.

The solution of Question 81 Chapter 2 of Class 12 Part – 1: –

Profit and Loss Appreciation Account

For the year ended on 31st March 2016

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Particulars		Amount	Particular		Amount
To Interest on Capital A/c:			By Profit and Loss A/c		56,000
A	3,750		By Interest on Drawings
B	2,000		A	510
C	1,500	7,250	B	250
To Profit Transferred To Current A/C’s			C	350	1,110
A	24,930
B	12,465
C	12,465	49,860
		57,100			57,100

Partner’s Capital Account

Particulars	A Rs.	B Rs.	C Rs.	Particular	A Rs.	B Rs.	C Rs.
To Balance b/d	–	–	5,000	By Balance b/d	10,000	5,000	–
To drawings A/c	15,000	10,000	10,000	By Salaries A/c	3,750	2,000	1,500
To Interest on Drawings A/c	510	250	350	By P & L App. A/c	24,930	12,465	12,465
To Insurance premium A/c	1,000	–	–	By balance c/d	–	–	1,385
To Travelling Expenses A/c	–	3,000	–
To Balance c/d	22,170	6,215	–
	38,680	19,465	15,350		38,680	19,465	15,350

Working Notes;
(1) Interest On Additional Drawings:
A’s Life Insurance Premium = Rs. 1,000
Interest On this Amonut ( Additional Drawing) = 1,000×4/100×3/12 = Rs. 10
B’s Life Insurance Premium = Rs. 3,000
Interest On this Amonut ( Additional Drawing) = 3,000×4/100×6/12 = Rs. 60
(2) Calculation of distributable profit among partner’s:

	(Rs.)	(Rs.)
Firm’s Profit		60,000
Add: Life Insurance	1,000
Add: Tavelling Expenses	3,000	4,000
		64,000
Less: Repairs to Machinery	10,000
Depreciation @20%	(2,000)	8,000
		56,000