Question 91 Chapter 2 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 91 Chapter 2 of +2-A

Question 91 Chapter 2 of +2-A

91. The partners of a firm, Alia, Bhanu and Chand distributed the profits for the year ended 31st March 2017, 80,000 in the ratio of 3 : 3: 2 without providing for the following adjustments:
a Alia and Chand were entitled to a salary of 1,500 each p.a.
b Bhanu was entitled for a commission of 4,000.
c Bhanu and Chand had guaranteed a minimum profit of 35,000 p.a. to Alia any deficiency to borne equally by Bhanu and Chand.
Pass the necessary journal entry for the above adjustments in the books of the firm. Show workings clearly.

 

The solution of Question 91 Chapter 2 of +2-A

:

 

Date Particulars
L.F. Debit Credit
  Chand’s Capital A/c *1 Dr   21,000  
  Bhanu’s Capital A/c *1 Dr   2,000  
  To Alia’s Capital A/c       23,000
  (Being adjustment made for deficiency of R’s Capital)        



 

Statement Showing Adjustment of Profit required
Particulars Alia’s Bhanu’s Chand’s Total
Salary to be paid 18,000 18,000 36,000
Add: Commission to be paid 4,000 4,000
Add: Profit to be Credited 35,000 5,000 40,000
Total Amount to be credited 53,000 9,000 18,000 80,000
Less: Profit Already credited (2:2:1) 30,000 30,000 20,000 80,000
  23,000  – 21,000 – 2,000
 

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

Bhanu’s get extra so we have to debit his capital a/c with difference amount

 

 

 

Chand’s get extra so we have to debit his capital a/c with difference amount

 

 

Profit Already credited

Profit of the year =40,000
Profit-sharing Ratio =3 : 3 : 2

Alia’s Share of Profit 40,000 X 3
8

Alia’s Share of Profit  = 15,000

Bhanu’s Share of Profit 40,000 X 3
8

Bhanu’s Share of Profit = 15,000

Chand’s Share of Profit 40,000 X 2
8
       

Chand’s Share of Profit = 10,000
Alia’s Minimum Guaranteed Profit = Rs 35,000
Alia’s Actual Profit Share i.e. 15,000 is less than his Minimum Guaranteed Profit i.e. 35,000
Deficiency in Alia’s Profit Share = 35,000 − 15,000 = Rs 20,000
This deficiency of Rs 20,000 is to be borne by Bhanu and Chand in the ratio of 1: 1

Bhanu’s Share of Profit 20,000 X 1
2

Bhanu’s Share of Profit= 10,000


Chand’s Share of Profit 20,000 X 1
2

Chand’s Share of Profit = 10,000

Now, Final distributed among the partners

Alia’s Share of Profit = 15,000 + 20,000 =35,000
Bhanu’s Share of Profit = 15,000 10,000 =5,000
Chand’s Share of Profit = 10,000 10,000 =Nil

 

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 91 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

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.