Question

Q. 3) Following information is provided for Tarun Enterprises for the year
ended 31st March 2020:
Cash Sales for the year Rs. 2,00,000
Credit Sales for the year Rs. 1,00,000
Received Rs. 20,000 during current year for goods sold on credit last year. Total purchases during the year Rs. 1,50,000 ( out of it Rs. 20,000 is still to
be paid)
Expenses paid during the year for current year ( 2019-20) Rs. 20,000
Expenses paid during the year for previous year( 2018-19) Rs. 10,000
Expenses paid during the year for next year ( 2020-21) Rs. 5,000
Calculate Profit/ Loss if accounts are maintained on :
i) Cash Basis ii) Accrual Basi

Answer 1

ACCOUNTANCY

A, B and C are partners sharing profits and losses in the ratio of A

2

1

,B

10

3

,C

5

1

after providing interest @ 5% on their respective capitals, viz., A Rs. 50,000; B Rs. 30,000 and C Rs. 20,000 and allowing B and C a salary of Rs. 5,000 each per annum. During the year ended 31st March, 2018, A has drawn Rs. 10,000 and B and C in addition to their salaries have drawn Rs. 2,500 and Rs.1,000 respectively. The Profit and Loss Account for the year ended 31st March, 2018 showed a net profit of Rs. 45,000 before charging (a) interest on capital and (b) partners' salaries. On 1st April, 2017, the balances in the Current Accounts of the partners were A (Cr.) Rs. 4,500; B (Cr.) Rs. 1,500 and C (Cr.) Rs. 1,000. Interest is not charged on Drawings or Current Account balances. Show Partners' Capital and Current Accounts as at 31st March, 2018 after division of profits In accordance with the partnership agreement.

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ANSWER

PROFIT AND LOSS APPROPRIATION ACCOUNT

Particulars Amount Particulars Amount

To Interest on capital

A= 50000*5%=2500

B=30000*5%=1500

C=20000*5%=1000 5000 By net profit 45000

To salary to

B= 5000

C=5000 10000

To profit T/f to

P's current A/c 15000

Q's current A/c 9000

R's current A/c 6000 30000

Total 45000 Total 45000

PARTNERS CAPITAL ACCOUNT

Particulars A B C Particulars A B C

To balance c/d 50000 30000 20000 By balance b/d 50000 30000 20000

Total 50000 30000 20000 Total 50000 30000 20000

PARTNERS CURRENT ACCOUNT

Particulars A B C Particulars A B C

To drawings

10000 7500 6000 By bal b/d 4500 1500 1000

By Interest on capital 2500 1500 1000

By bal c/d 12000 9500 7000 By Salaries 5000 5000

P/L Appropriation A/c 15000 9000 6000

Total 22000 17000 13000