[ISC] Q. 64 solution of Fundamentals of Partnership Firms TS Grewal Book ISC 2023-24 Edition

Solution of Question number 64 of the Fundamentals of partnership Accounts (Firm) chapter TS Grewal Book 2023-24 Edition ISC Board.

Kamal, Lalit and Neha were partners sharing profits and losses in the ratio of 3 : 3 : 2. Balances in their Capital Accounts as on 1st April, 2022 stood at ₹ 8,00,000, ₹ 7,00,000 and ₹ 2,00,000 (Dr.) respectively. Anita was admitted as partner on that date with capital of ₹ 4,00,000 for 1/5th share of profits with minimum guaranteed share of profit of ₹ 3,00,000. It was decided that Kamal, Lalit and Neha will bear excess of 1/5th share going to Anita in the ratio of 2 : 2 : 1.

Profit sharing ratio after Anita’s admission will be 3 : 3 : 2 : 2. Profit for the year ended 31st March, 2023 was ₹ 15,00,000 before the following adjustments arising due to the Partnership Deed:

(i) Interest on capital is to be allowed @ 5% p.a.

(ii) Interest on Drawings were Kamal – ₹ 20,000; and Lalit – ₹ 40,000: and

(iii) Salary to Lalit – ₹ 96,000; and Anita – ₹ 1,20,000.

You are required to:

(a) Pass the Journal entry for distribution of divisible profit; and

(b) Prepare Profit & Loss Appropriation Account.

Solution:-

Alternative of Journal Entry

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