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Active blunt end circle started a business on 1st April 2017 with capital of 450000 6 lakh and 350000 according to partnership agreement: (1) profit earned in any year will be distributed as under: Up to 270000-equally Excess over 270000-one-half to active,one sixth to blunt and one third to circle (2)provide interest on capital and drawing @6%p.a. (3)circle is entitled to get a monthly salary of 4000 and Bullet is entitled to get a monthly salary of 6000 in addition to above circle and blunt are entitled to get a commission of 5% each on net of profit after taking into consideration the interest and all commissions Drawing of partners during the year were: Active withdrew regularly 5000 at the beginning of every month Blunt withdrew regularly 7000 at end of every month Circle withdrew 80000 during the year Profit for the year 593120 prepare partners current account

Posted by Akshat Agrawal 3 years, 1 month ago

CBSE > Class 12 > Accountancy

1 answers

Sia ? 3 years, 1 month ago

Books of Active, Blunt and Circle
Profit & loss Appropriation A/c
(for the year ended 31st March, 2018)

Dr.				Cr.
Particulars		₹	Particulars	₹
To Interest on Capital:			By Profit & Loss A/c (Net Profit for the year)	5,93,120
Active	27,000		By Interest on Drawings:
Blunt	36,000		Active {tex}60,000 \times \frac{6}{100} \times \frac{6.5}{12}{/tex} = 1,950
Circle	21,000	84,000	Blunt {tex}84,000 \times \frac{6}{100} \times \frac{5.5}{12}{/tex} = 2,310
To Salary:			Circle {tex}80,000 \times \frac{6}{100} \times \frac{6}{12}{/tex} = 2,400	6,660
Blunt	72,000
Circle	48,000	1,20,000
To Commission (Note 1)
Blunt	17,990
Circle	17,990	35,980
To Profit Transferred to: (Note 2)
Active's Current A/c	1,34,900
Blunt's Current A/c	1,04,967
Circle's Current A/c	1,19,933	3,59,800
		5,99,780		5,99,780

PARTNER'S CURRENT ACCOUNTS

Dr.							Cr.
Particulars	Active	Blunt	Circle	Particulars	Active	Blunt	Circle
To Drawings	60,000	84,000	80,000	By Interest on Capital	27,000	36,000	21,000
To Interest on Drawings	1,950	2,310	2,400	By Salary		72,000	48,000
To Balance c/d	99,950	1,44,647	1,24,523	By Commission		17,990	17,990
				By Profit & Loss App. A/c	1,34,900	1,04,967	1,19,933
	1,61,900	2,30,957	2,06,923		1,61,900	2,30,957	2,06,923

Working Note:

Balance of Profit = ₹5,93,120 + 6,660 - 84,000 - 1,20,000 = ₹3,95,780
Commission to Blunt and Circle is 5% to each partner after charging such commission.
Hence, the commission will be {tex}\frac{5}{110}{/tex} to each partner.
Commission to Blunt = {tex}3,95,780 \times \frac{5}{110}{/tex} = ₹17,990
Commission to Circle = {tex}3,95,780 \times \frac{5}{110}{/tex} = ₹17,990

Divisible Profit: ₹3,95,780 - 17,990 - 17,990 = ₹3,59,800

	Active ₹	Blunt ₹	Circle ₹
Up to ₹2,70,000 Equally	90,000	90,000	90,000
₹3,59,800 - ₹2,70,000 = ₹89,800 in {tex}\frac{1}{2}: \frac{1}{6}: \frac{1}{3}{/tex}	44,900	14,967	29,933
	1,34,900	1,04,967	1,19,933

For calculation of interest on drawings, the period would be taken as six months, which is the average period assuming, that amount is withdrawn evenly in the middle of the month, throughout the year.

1Thank You

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