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M.502 An Aid to Accountancy—CBSE XII

Working Notes:
1. Calculation of Suresh’s Share of Profit:
Time tillDeath
Suresh’s Share of Profit = Estimated Current Year’s Profit × × Suresh’s Share of Profit
12
Estimated Current Year’s Profit = Previous Year’s Profit + 20% = ` 1,70,000 + ` 34,000 = ` 2,04,000
1 4
Thus, Suresh’s Share of Profit = ` 2,04,000 × ¥ = `11,333.
6 12
2. Adjustment of Suresh’s Share of Goodwill:

` 75,000 + `1,40,000 - ` 25,000 + `1,70,000
Average Profit = = ` 90,000
4
Value of Firm’s Goodwill = ` 90,000 × 3 = ` 2,70,000
1
Suresh’s Share of Goodwill = ` 2,70,000 × = ` 45,000, which is to be contributed by Mahesh and Naresh
in their gaining ratio of 3 : 2. 6

12. PROFIT AND LOSS APPROPRIATION ACCOUNT
Dr. for the year ended 31st March, 2018 Cr.

Particulars ` Particulars `
To Interest on Capital A/cs: By Profit and Loss A/c (Net Profit) 1,15,900
X (` 90,000 × 6/100) 5,400 By Interest on Drawings A/c:
Y (` 60,000 × 6/100) 3,600 Z (` 6,000 × 5/100) (WN) 300
Z (` 30,000 × 6/100) 1,800 10,800 By Interest on Current A/c:
To Interest on Current A/cs: Y (` 10,000 × 5/100) 500
X (` 20,000 × 5/100) 1,000
Z (` 12,000 × 5/100) 600 1,600
To Partners’ Salary A/cs:
Y 6,000
Z 8,000 14,000
To Profit transferred to:
X’s Current A/c 54,180
Y’s Current A/c 27,090
Z’s Current A/c 9,030 90,300
1,16,700 1,16,700

Working Note: ASCERTAINMENT OF INTEREST ON DRAWINGS TO BE CHARGED

Particulars X (`) Y (`) Z (`)
Drawings including Salaries 40,000 31,000 23,000
Less: Salaries ... 6,000 8,000
Drawings excluding Salaries 40,000 25,000 15,000
Share of Profit of ` 90,000* (6 : 3 : 1) 54,000 27,000 9,000
Excess or Short Drawings 14,000 2,000 6,000
(Short) (Short) Excess
Interest to be Charged @ 5% 300
* ` 1,15,900 (Profit) – ` 14,000 (Salary of Y and Z) – ` 10,800 (Interest on Capitals of X, Y
and Z) – ` 1,600 (Interest on Current A/cs of X and Z) + ` 500 (Interest on Y’s Current A/c)
= ` 90,000.