We are searching data for your request:
Upon completion, a link will appear to access the found materials.
| ||
President Barack Obama visits with players during a stop to surprise members of the Northwest Little League baseball teams at Friendship Park in Washington, D.C., May 19, 2014 | ||
12:30PM THE PRESIDENT and THE VICE PRESIDENT meet for lunch with Combatant Commanders 7:30PM THE PRESIDENT delivers remarks and answers questions at a DCCC event |
Loch Ness Monster
The Loch Ness Monster, or Nessie (Scottish Gaelic: Uilebheist Loch Nis [2] ), is a creature in Scottish folklore that is said to inhabit Loch Ness in the Scottish Highlands. It is often described as large, long-necked, and with one or more humps protruding from the water. Popular interest and belief in the creature has varied since it was brought to worldwide attention in 1933. Evidence of its existence is anecdotal, with a number of disputed photographs and sonar readings.
The scientific community regards the Loch Ness Monster as a phenomenon without biological basis, explaining sightings as hoaxes, wishful thinking, and the misidentification of mundane objects. [3] The pseudoscience and subculture of cryptozoology has placed particular emphasis on the creature.
›› What if you only counted weekdays?
In some cases, you might want to skip weekends and count only the weekdays. This could be useful if you know you have a deadline based on a certain number of business days. If you are trying to see what day falls on the exact date difference of 120 weekdays from today, you can count up each day skipping Saturdays and Sundays.
Start your calculation with today, which falls on a Wednesday. Counting forward, the next day would be a Thursday.
To get exactly one hundred and twenty weekdays from now, you actually need to count 168 total days (including weekend days). That means that 120 weekdays from today would be December 8, 2021.
If you're counting business days, don't forget to adjust this date for any holidays.
TS Grewal Solutions for Class 12 Accountancy Chapter 2- Accounting for Partnership Firms- Fundamentals
TS Grewal Solutions for Class 12 Accountancy Chapter 2 Accounting for Partnership Firms- Fundamentals is considered to be an important concept to be learnt thoroughly by the students. Here, we have provided
TS Grewal Accountancy solutions for Class 12.
| Board | CBSE |
| Class | Class 12 |
| Subject | Accountancy |
| Chapter | Chapter 2 |
| Chapter Name | Accounting for Partnership Firms- Fundamentals |
| Number of questions solved | 54 |
| Category | TS Grewal |
This Chapter 2 Accounting for Partnership Firms- Fundamentals explains the below-mentioned concepts:
- Partnership Deed
- Special aspects of partnership accounts
- Maintenance of capital accounts of partners
- Past Adjustments
- Final Accounts
Class 12 TS Grewal Solutions Accountancy Vol 1 Chapter 2:-
Exercise
In the absence of Partnership Deed, what are the rules related to :
(b) Interest on partners’ capitals
(c) Interest on partners’ loan
(e) Interest on partners’ drawings
(a) Partners will not be allowed any salary
(b) On partner’s capital, no interest will be allowed
(c) Only 6% interest in Partner’s Loan
(d) Profit distribution to be done in equal ratio
(e) In partner’s drawings, no Interest will be charged
Following differences have arisen among P, Q and R. State who is correct in each case:
(a) P used ₹ 20,000 belonging to the firm and made a profit of ₹ 5,000. Q and R want the amount to be given to the firm?
(b) Q used ₹ 5,000 belonging to the firm and suffered a loss of ₹ 1000. He wants the firm to bear the loss?
(c) P and Q want to purchase goods from A Ltd., R does not agree?
(d) Q and R want to admit C as a partner, P does not agree?
(a) P will pay ₹20,000 along with ₹ 5,000 profit to the company as the money belongs to the company. It is because of the relation between the principal and agent. Here, P is both the principal and the agent to Q and R and the firm. According to the Partnership Act rules, if an agent makes a profit made by utilising the firm’s assets is due to the company.
(b) Q has to pay the firm ₹ 5,000. The Partnership Act, 1932, all the partnership firm partners’ are liable for all the losses made by their negligence. In this scenario, Q is liable for the loss as he has utilized the company’s property and portrayed himself as a principal and not an agent to the firm and other partners.
(c) A partner can purchase and trade products without discussing with the other partners. The discussion happens only if a partner has some restriction to purchase and trade firm properties and a public notice is issued.
(d) In this scenario, C will not be included in the firm as P, has disagreed to admit C. The Act says, a new partner will not get admission to a firm if the existing partners disagree for his/her admission.
A, B and C are partners in a firm. They do not have a Partnership Deed. At the end of the first year of the commencement of the firm, they have faced the following problems :
(a) A wants that interest on capital should be allowed to the partners but B and C do not agree.
(b) B wants that the partners should be allowed to draw a salary but A and C do not agree.
(c) C wants that the loan given by him to the firm should bear interest @ 10% p.a. but A and B do not agree.
(d) A and B having contributed larger amounts of capital, desire that the profits should be divided in the ratio of their capital contribution but C does not agree.
State how you will settle these disputes if the partners approach you for purpose.
| Disputes | Reasonable Judgements | |
| (a) | A wants that interest on capital should be allowed to the partners but B and C do not agree. | The partnership Act says, no capital interest will be granted because between A, B, and C no agreement has bee signed regarding capital interest. |
| (b) | B wants that the partners should be allowed to draw a salary but A and C do not agree. | No partners are liable for any salary because of no partnership agreement. |
| (c) | C wants that the loan given by him to the firm should bear interest @ 10% p.a. but A and B do not agree. | Only 6% interest is allowed on a partner’s loan when there is no partnership agreement. |
| (d) | A and B having contributed larger amounts of capital, desire that the profits should be divided in the ratio of their capital contribution but C does not agree. | Profits will be equally shared in the absence of a partnership agreement |
Jaspal and Rosy were partners with a capital contribution of ₹ 10,00,000 and ₹ 5,00,000, respectively. They do not have a Partnership Deed. Jaspal wants that profits of the firm should be shared in their capital ratio. Rosy convinced Jaspal that profits should be shared equally. Explain how Rosy would have convinced Jaspal for sharing the profit equally.
In any partnership firm when there is no partnership deed, then the rule of the Indian Partnership Act of 1932 applies. In the act, when the agreement is not signed then the profit should be distributed equally to all the partners.
In this scenario, Jaspal’s point of view does not align with the partnership Act rule and therefore, Rosy would have convinced her by explaining her the Partnership Act, 1932 provisions.
Harshad and Dhiman have been in partnership since 1st April, 2018. No partnership agreement was made. They contributed ₹ 4,00,000 and ₹ 1,00,000 respectively as capital. In addition, Harshad advanced an amount of ₹ 1,00,000 to the firm on 1st October, 2018. Due to long illness, Harshad could not participate in business activities from 1st August, 2018 to 30th September, 2018. Profit for the year ended 31st March, 2019 was ₹ 1,80,000. The dispute has arisen between Harshad and Dhiman.
(i) He should be given interest @ 10% per annum on capital and loan
(ii) Profit should be distributed in the ratio of capital
(i) Profit should be distributed equally
(ii) He should be allowed ₹ 2,000 p.m. as remuneration for the period he managed the business in the absence of Harshad
(iii) Interest on Capital and loan should be allowed @ 6% p.a.
You are required to settle the dispute between Harshad and Dhiman. Also, prepare Profit and Loss Appropriation Account.
Harshad Declaration:
(i) According to Indian partnership act 1932, in the absence of agreement, only 6% of interest is allowed on a partner’s loan and no interest will be incurred in partner’s capital..
(ii) As per the partnership act 1932, in the absence of agreement profit will be shared equally.
Dhiman Claims:
(i) True, according to partnership act 1932, if no agreement is signed between the partners the profit will be equally distributed.
(ii) No partners are entitled to any sort of salary or remuneration when there is no agreement.
(iii) Here, if there is no agreement between the partners only 6% will be allowed to partner’s loan and no interest in a partner’s capital.
Profit Distribution:
| Dr. | Profit and Loss Adjustment Account as on 31st March, 2019 | Cr. | |||
| Particulars | ₹ | Particulars | ₹ | ||
| Interest on Partner’s Loan | Profit and Loss A/c | 1,80,000 | |||
| Harshad 1,00,000 × (6/100) × (6/12) | 3,000 | ||||
| Profit and Loss Appropriation A/c | 1,77,000 | ||||
| 1,80,000 | 1,80,000 | ||||
| Dr. | Profit and Loss Appropriation Account as on 31st March, 2019 | Cr. | |||
| Particulars | ₹ | Particulars | ₹ | ||
| Profit transferred to | Profit and Loss Adjustment A/c | 1,77,000 | |||
| Harshad’s Capital | 88,500 | ||||
| Dhiman’s Capital | 88,500 | ||||
| 1,77,000 | 1,77,000 | ||||
A and B are partners from 1st April 2018, without a Partnership Deed and they introduced capitals of ₹ 35,000 and ₹ 20,000 respectively. On 1st October 2018, A advanced loan of ₹ 8,000 to the firm without any agreement as to interest. The profit and Loss Account for the year ended 31st March 2019 shows a profit of ₹ 15,000 but the partners cannot agree on payment of interest and on the basis of division of profits.
You are required to divide the profits between them giving reasons for your method.
| Profit and Loss Account as on March 31, 2019 | ||||
| Dr. | Cr. | |||
| Particulars | ₹ | Particulars | ₹ | |
| A’s Loan Interest | 240 | Profit (before Interest) | 15,000 | |
| Profit transferred to: | ||||
| A’s Capital A/c | 7,380 | |||
| B’s Capital A/c | 7,380 | 14,760 | ||
| 15,000 | 15,000 | |||
Working Notes 1: Loan interest Evaluation
Loan interest to be provided @ 6% p.a.
Time (from 1st October to 31st March) = 6 months
A’s loan interest = 8,000 X (frac<6><100>) X (frac<6><12>) = ₹ 240
Working Notes 1: Profit Share of Partner Evaluation
Equal distribution of profit
Profit after A’s loan Interest = ₹ 15,000 − ₹ 240 = ₹ 14,760
Therefore, A and B profit-sharing = 14,760 X (frac<1><2>) = ₹7,380
A and B are partners in a firm sharing profits in the ratio of 3: 2. They had advanced to the firm a sum of ₹ 30,000 as a loan in their profit-sharing ratio on 1st October, 2017. The Partnership Deed is silent on interest on loans from partners. Compute interest payable by the firm to the partners, assuming the firm closes its books every year on 31st March.
The total advanced amount given by the partners = ₹ 30,000
A’s advance = 30,000 X (frac<3><5>) = ₹18,000
B’s advance = 30,000 X (frac<2><5>) = ₹12,000
Duration (from 1st October, 2017 to 31st March, 2018) = 6 months
Interest incurred on Advances Evaluation
A’s advance interest = 18,000 X (frac<6><100>) X (frac<6><12>) = ₹ 540
B’s advance interest = 12,000 X (frac<6><100>) X (frac<6><12>) = ₹ 360
Note: Because there is no partnership agreement only 6% of the interest rate is allowed on the loan.
X and Y are partners sharing profits and losses in the ratio of 2 : 3 with capitals ₹ 2,00,000 and ₹ 3,00,000, respectively. On 1st October, 2018, X and Y gave loans of ₹ 80,000 and ₹ 40,000 respectively to the firm. Show distribution of profits/losses for the year ended 31st March, 2019 in each of the following alternative cases:
Case 1: If the profits before interest for the year amounted to ₹ 21,000.
Case 2: If the profits before interest for the year amounted to ₹ 3,000.
Case 3: If the profits before interest for the year amounted to ₹ 5,000.
Case 4: If the loss before interest for the year amounted to ₹ 1,400.
X’s loan interest for six months = 80,000 X (frac<6><100>) X (frac<6><12>) = ₹ 2,400
Y’s loan interest for six months = 40,000 X (frac<6><100>) X (frac<6><12>) = ₹ 1,200
Case 1- Profits without the interest = ₹ 21,000
| Profit and Loss Account as on March 31, 2019 | ||||
| Dr. | Cr. | |||
| Particulars | ₹ | Particulars | ₹ | |
| X’s Loan Interest | 2,400 | Profit (before interest) | 21,000 | |
| Y’s Loan Interest | 1,200 | |||
| Profit transferred to | ||||
| X’s Capital A/c (17,400 X (frac<2><5>) | 6,960 | |||
| Y’s Capital A/c (17,400 X (frac<3><5>)) | 10,440 | 17,400 | ||
| 21,000 | 21,000 | |||
Case 2 – Profits before interest ₹ 3,000
| Profit and Loss Account as on March 31, 2019 | ||||
| Dr. | Cr. | |||
| Particulars | ₹ | Particulars | ₹ | |
| Interest on X’s Loan | 2,400 | Profit (before interest) | 3,000 | |
| Interest on Y’s Loan | 1,200 | Loss transferred to- | ||
| X’s Capital A/c (600 × 2/5) | 240 | |||
| Y’s Capital A/c (600 × (3/5) | 360 | 600 | ||
| 3,600 | 3,600 | |||
Case 3- Profits before interest ₹ 5,000
| Profit and Loss Account as on March 31, 2019 | ||||
| Dr. | Cr. | |||
| Particulars | ₹ | Particulars | ₹ | |
| Interest on X’s Loan | 2,400 | Profit (before interest) | 5,000 | |
| Interest on Y’s Loan | 1,200 | |||
| Profit transferred to: | ||||
| X’s Capital A/c (1400 × 2/5) | 560 | |||
| Y’s Capital A/c (1400 × 3/5) | 840 | 1,400 | ||
| 5,000 | 5,000 | |||
Case 4- Loss before interest ₹ 1,400
| Profit and Loss Account as on March 31, 2019 | ||||
| Dr. | Cr. | |||
| Particulars | ₹ | Particulars | ₹ | |
| Loss (before interest) | 1,400 | Loss transferred to- | ||
| Interest on X’s Loan | 2,400 | X’s Capital A/c (5,000 × 2/5) | 2,000 | |
| Interest on Y’s Loan | 1,200 | Y’s Capital A/c (5,000 × 3/5) | 3,000 | 5,000 |
| 5,000 | 5,000 | |||
Bat and Ball are partners sharing the profits in the ratio of 2 : 3 with capitals of ₹ 1,20,000 and ₹ 60,000 respectively. On 1st October, 2018, Bat and Ball gave loans of ₹ 2,40,000 and ₹ 1,20,000 respectively to the firm. Bat had allowed the firm to use his property for business for a monthly rent of ₹ 5,000. The loss for the year ended 31st March, 2019 before rent and interest amounted to ₹ 9,000. Show distribution of profit/loss.
| Profit and Loss Account as on March 31, 2019 | ||||
| Dr. | Cr. | |||
| Particulars | ₹ | Particulars | ₹ | |
| Loss (before interest) | 9,000 | |||
| Rent (5,000 x 12) | 60,000 | Loss transferred to: | ||
| Bat’s loan Interest | 7,200 | Bat’s Capital A/c | 31,920 | |
| Ball’s loan Interest | 3,600 | Ball’s Capital A/c | 47,880 | 79,800 |
| 79,800 | 79,800 | |||
Working Notes 1: Partner’s Loan Interest
Bat’s Loan interest for six months = ₹ 2,40,000 X (frac<6><100>) X (frac<6><12>) = ₹ 7,200
Bat’s Loan interest for six months = ₹1,20,000 X (frac<6><100>) X (frac<6><12>) = ₹ 3,600
Working Notes 2: Loss distribution to partners Evaluation
Bat’s Loan share = 79,800 X (frac<2><5>) = ₹ 31,920
Ball’s Loan share = 79,800 X (frac<3><5>) = ₹ 47,880
Question 10
A and B are partners. A’s Capital is ₹ 1,00,000 and B’s Capital is ₹ 60,000. Interest on capital is payable @ 6% p.a. B is entitled to a salary of ₹ 3,000 per month. Profit for the current year before interest and salary to B is ₹ 80,000.
Prepare Profit and Loss Appropriation Account.
| Profit and Loss Appropriation A/c | |||||
| Dr. | Cr. | ||||
| Particulars | ₹ | Particulars | ₹ | ||
| Interest on Capital: | Profit and Loss A/c (Net Profit) | 80,000 | |||
| A | 6,000 | ||||
| B | 3,600 | 9,600 | |||
| Salary to B (₹ 3,000 × 12) | 36,000 | ||||
| Profit transferred to: | |||||
| A’s Capital A/c | 17,200 | ||||
| B’s Capital A/c | 17,200 | 34,400 | |||
| 80,000 | 80,000 | ||||
Working Notes 1: Capital Interest Evaluation
A’s Capital Interest = ₹ 1,00,000 X (frac<6><100>) = ₹ 6,000
B’s Capital Interest = ₹ 60,000 X (frac<6><100>) = ₹ 3,600
Working Notes 2: Partner Profit Sharing Evaluation
Divisible Profit = ₹ 80,000 – ₹ 9,600 – ₹ 36,000 = ₹ 34,400
A and B profit sharing = 34,4000 X (frac<1><2>) = ₹17,200 each
Question 11
X, Y and Z are partners in a firm sharing profits in 2 : 2 : 1 ratio. The fixed capitals of the partners were : X ₹5,00,000 Y ₹ 5,00,000 and Z ₹ 2,50,000 respectively. The Partnership Deed provides that interest on capital is to be allowed @ 10% p.a. Z is to be allowed a salary of ₹ 2,000 per month. The profit of the firm for the year ended 31st March, 2018 after debiting Z’s salary was ₹ 4,00,000.
Prepare Profit and Loss Appropriation Account.
| Profit and Loss Appropriation A/c as on 31st March 2018 | |||||
| Dr. | Cr. | ||||
| Particulars | ₹ | Particulars | ₹ | ||
| Interest on Capital: | Profit and Loss A/c | ||||
Working Notes 1: Z’s salary will not be debited to the Profit and Loss Appropriation A/c because ₹ 4,00,000 Profit is given after adjusting Z’s salary.
Working Note 2: Capital Interest Evaluation
X’s Capital Interest = ₹5,00,000 X (frac<10><100>) = ₹50,000
Y’s Capital Interest = ₹5,00,000 X (frac<10><100>) = ₹50,000
Z’s Capital Interest = ₹2,50,000 X (frac<10><100>) = ₹25,000
Working Note 3: Partner’s profit sharing Evaluation
Profit sharing ratio = 2 : 2 : 1
X’s Profit Share = ₹2,75,000 X (frac<2><5>) = ₹ 1,10,000
Y’s Profit Share = ₹2,75,000X (frac<2><5>) = ₹ 1,10,000
Z’s Profit Share = ₹2,75,000 X (frac<1><5>) = ₹ 55,000
Question 12
X and Y are partners sharing profits in the ratio of 3 : 2 with capitals of ₹ 8,00,000 and ₹ 6,00,000, respectively. Interest on capital is agreed @ 5% p.a. Y is to be allowed an annual salary of ₹ 60,000 which has not been withdrawn. Profit for the year ended 31st March, 2019 before interest on capital but after charging Y’s salary amounted to ₹ 2,40,000.
A provision of 5% of the profit is to be made in respect commission to the manager. Prepare an account showing the allocation profits.
| Profit and Loss Adjustment Account as on 31st March 2019 | |||
| Dr. | Cr. | ||
| Particulars | ₹ | Particulars | ₹ |
| Commission for Manager (3,00,000×5%) | 15,000 | Profit and Loss A/c | |
| Profit and Loss Appropriation A/c as on 31st March 2019 | ||||
| Dr. | Cr. | |||
| Particulars | ₹ | Particulars | ₹ | |
| Salary to Y | 60,000 | Profit and Loss Adjustment A/c | 2,85,000 | |
| Interest on Capital: | (After manager’s commission) | |||
| X | 40,000 | |||
| Y | 30,000 | 70,000 | ||
| Profit transferred to: | ||||
| X’s Capital A/c | 93,000 | |||
| Y’s Capital A/c | 62,000 | 1,55,000 | ||
| 2,85,000 | 2,85,000 | |||
Working Notes 1: Manager’s Commission Evaluation
Profit for making Managers’ Commission = 2,40,000 + 60,000 (Y’s Salary) = ₹3,00,000
Manager’s Commission=₹(3,00,000 X (frac<5><100>)) = 415,000
Working Notes 2: Capital Interest Evaluation
X’s Capital Interest =( ₹ 8,00,000 X (frac<5><100>)) = ₹40,000
Y’s Capital Interest =( ₹ 6,00,000 X (frac<5><100>)) = ₹30,000
Working Notes 3: Partner’s capital share Evaluation
Distribution of profit = ₹ 2,85,000 − ₹ 60,000 − ₹ 70,000 = ₹1,55,000
X’s Share of Profit=₹(1,55,000 X (frac<3><5>) = ₹ 93,000
Y’s Share of Profit=₹(1,55,000 X (frac<2><5>) = ₹ 62,000
Question 13
Prem and Manoj are partners in a firm sharing profits in the ratio of 3 : 2. The Partnership Deed provided that Prem was to be paid a salary of ₹ 2,500 per month and Manoj was to get a commission of ₹ 10,000 per year. Interest on capital was to be allowed @ 5% p.a. and interest on drawings was to be charged @ 6% p.a. Interest on Prem’s drawings was ₹ 1,250 and on Manoj’s drawings was ₹ 425. Interest on Capitals of the partners were ₹ 10,000 and ₹ 7,500 respectively. The firm earned a profit of ₹ 90,575 for the year ended 31st March, 2018.
Prepare Profit and Loss Appropriation Account of the firm.
| Profit and Loss Appropriation Account as on 31st March 2018 | |||||
| Dr. | Cr. | ||||
| Particulars | ₹ | Particulars | ₹ | ||
| Prem Salary (₹ 2,500 × 12) | 30,000 | Profit and Loss A/c (Net Profit) | 90,575 | ||
| Manoj Commission | 10,000 | Interest on Drawings A/c: | |||
| Capital Interest: | Prem | 1,250 | |||
| Prem | 10,000 | Manoj | 425 | 1,675 | |
| Manoj | 7,500 | 17,500 | |||
| Profit transferred to: | |||||
| Prem’s Current A/c | 20,850 | ||||
| Manoj’s Current A/c | 13,900 | 34,750 | |||
| 92,250 | 92,250 | ||||
Working Notes 1: Capital Interest Evaluation
Prem’s Capital Interest = 2,00,000 X (frac<5><100>) = ₹ 10,000
Manoj’s Capital Interest = 1,50,000 X (frac<5><100>) = ₹ 7,500
Working Notes 2: Partner Profit Share Evaluation
Profit sharing ratio = 3 : 2
Profit sharing for Prem = 34,750 X (frac<3><5>)= ₹ 20,850
Profit sharing for Manoj = 34,750 X (frac<2><5>)= ₹ 13,900
Question 14
Reema and Seema are partners sharing profits equally. The Partnership Deed provides that both Reema and Seema will get monthly salary of Rs 15,000 each, Interest on Capital will be allowed @ 5% p.a. and Interest on Drawings will be charged @ 10% p.a. Their capitals were Rs 5,00,000 each and drawings during the year were Rs 60,000 each.
The firm incurred a loss of Rs 1,00,000 during the year ended 31st March, 2018.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018.
| Profit and Loss Appropriation A/c as on 31st March, 2018 | ||||||
| Dr. | Cr. | |||||
| Particulars | ₹ | Particulars | ₹ | |||
| Profit and Loss A/c | 1,00,000 | Interest on Drawings A/c: | ||||
| Reema | 3,000 | |||||
| Seema | 3,000 | 6,000 | ||||
| Loss transferred to | ||||||
| Reema | 47,000 | |||||
| Seema | 47,000 | 94,000 | ||||
| 1,00,000 | 1,00,000 | |||||
Note: There will be no capital and salary share to the partners as the company has incurred loss.
Working Notes 1: Partner Drawing Evaluation
Reema’s Share = 60,000 X 10% X (frac<6><12>) = ₹3,000
Seema’s Share = 60,000 X 10% X (frac<6><12>) = ₹3,000
Question 15
Bhanu and Partab are partners sharing profits equally. Their fixed capitals as on 1st April, 2018 are ₹ 8,00,000 and ₹ 10,00,000 respectively. Their drawings during the year were ₹ 50,000 and ₹ 1,00,000 respectively. Interest on Capital is a charge and is to be allowed @ 10% p.a. and interest on drawings is to be charged @ 15% p.a. Net Profit for the year ended 31st March, 2019 was ₹ 1,20,000.
Prepare Profit and Loss Appropriation Account.
| Profit and Loss Appropriation Account as on March 31, 2019 | |||||||
| Dr. | Cr. | ||||||
| Particulars | ₹ | Particulars | ₹ | ||||
| Capital Interest A/c: | Profit and Loss A/c | 1,20,000 | |||||
| Bhanu’s Current A/c | 80,000 | Interest on Drawings A/c: | |||||
| Partap’s Current A/c | 1,00,000 | 1,80,000 | Bhanu’s Current A/c | 3,750 | |||
| Partap’s Current A/c | 7,500 | 11,250 | |||||
| Loss transferred to | |||||||
| Bhanu’s Current A/c | 24,375 | ||||||
| Partap’s Current A/c | 24,375 | 48,750 | |||||
| 1,80,000 | 1,80,000 | ||||||
Working Note 1: Partner Drawing Interest Evaluation
Bhanu’s Drawing Interest – 50,000 X 15% X (frac<6><12>) = ₹3,750
Pratap’s Drawing Interest – 1,00,000 X 15% X (frac<6><12>) = ₹7,500
Working Note 2: Partner Capital Interest Evaluation
Bhanu’s Capital Interest – 50,000 X 10% ₹ 80,000
Pratap’s Capital Interest – 1,00,000 X 10% = ₹ 1,00,000
Question 16
Amar and Bimal entered into partnership on 1st April, 2018 contributing ₹ 1,50,000 and ₹ 2,50,000, respectively towards capital. The Partnership Deed provided for interest on capital @ 10% p.a. It also provided that Capital Accounts shall be maintained following the Fixed Capital Accounts method. The firm earned net profit of ₹ 1,00,000 for the year ended 31st March 2019.
Pass the Journal entry for interest on capital.
| Journal | |||||
| Date | Particulars | L.F. | Debit ₹ | Credit ₹ | |
| March 31 | Profit & Loss Appropriation A/c | Dr. | 40,000 | ||
| To Amar’s Current A/c | 15,000 | ||||
| To Bimal’s Current A/c | 25,000 | ||||
| (Capital interest transferred to Profit & Loss Appropriation A/c) | |||||
Working Notes 1: Capital Interest Evaluation
Amar’s Capital Interest = 1,50,000 X (frac<10><100>) = ₹15,000
Amar’s Capital Interest = 2,50,000 X (frac<10><100>) = ₹25,000
Question 17
Kamal and Kapil are partners having fixed capitals of ₹ 5,00,000 each as on 31st March, 2018. Kamal introduced further capital of ₹ 1,00,000 on 1st October, 2018 whereas Kapil withdrew ₹ 1,00,000 on 1st October, 2018 out of the capital.
Interest on capital is to be allowed @ 10% p.a.
The firm earned net profit of ₹ 6,00,000 for the year ended 31st March 2019.
Pass the Journal entry for interest on capital and prepare Profit and Loss Appropriation Account.
| Journal | |||||
| Date | Particulars | L.F. | Debit ₹ | Credit ₹ | |
| March 31 | Profit & Loss Appropriation A/c | Dr. | 1,00,000 | ||
| To Kamal’s Current A/c | 55,000 | ||||
| To Kapil’s Current A/c | 45,000 | ||||
| (Capital interest transferred to Profit & Loss Appropriation A/c) | |||||
| Profit and Loss Appropriation A/c as on 31st March 2019 | ||||
| Dr. | Cr. | |||
| Particulars | ₹ | Particulars | ₹ | |
| Capital Interest A/c: | Profit and Loss A/c | 6,00,000 | ||
| Kamal | 55,000 | |||
| Kapil | 45,000 | 1,00,000 | ||
| Profit transferred to: | ||||
| Kamal’s Current A/c | 2,50,000 | |||
| Kapil’s Current A/c | 2,50,000 | 5,00,000 | ||
| 6,00,000 | 6,00,000 | |||
Working Notes 1: Capital Interest Evaluation
Question 18
Simran and Reema are partners sharing profits in the ratio of 3 : 2. Their capitals as on 31st March, 2018 were ₹ 2,00,000 each whereas Current Accounts had balances of ₹ 50,000 and ₹ 25,000 respectively interest is to be allowed @ 5% p.a. on balances in Capital Accounts. The firm earned net profit of ₹ 3,00,000 for the year ended 31st March 2019.
Pass the Journal entries for interest on capital and distribution of profit. Also prepare Profit and Loss Appropriation Account for the year.
| Journal | |||||
| Date | Particulars | L.F. | Debit ₹ | Credit ₹ | |
| Profit & Loss Appropriation A/c | Dr. | 20,000 | |||
| To Simran’s Current A/c | 10,000 | ||||
| To Reema’s Current A/c | 10,000 | ||||
| (Interest on capital transferred to Profit & Loss Appropriation A/c) | |||||
| Profit & Loss Appropriation A/c | 2,80,000 | ||||
| To Simran’s Current A/c | 1,68,000 | ||||
| To Reema’s Current A/c | 1,12,000 | ||||
| (Profit transferred to Partners’ Current A/c) | |||||
| Dr. | Cr. | |||
| Particulars | ₹ | Particulars | ₹ | |
| Interest on Capital A/c: | Profit and Loss A/c | 3,00,000 | ||
| Simran | 10,000 | |||
| Reema | 10,000 | 20,000 | ||
| Profit transferred to: | ||||
| Simran’s Current A/c | 1,68,000 | |||
| Reema’s Current A/c | 1,12,000 | 2,80,000 | ||
| 3,00,000 | 3,00,000 | |||
Working Notes 1: Capital Interest Evaluation
Capital Interest Simran’s = 2,00,000 X (frac<5><100>) = ₹ 10,000
Capital Interest Simran’s = 2,00,000 X (frac<5><100>) = ₹ 10,000
Question 19
Anita and Ankita are partners sharing profits equally. Their capitals, maintained following the Fluctuating Capital Accounts Method, as on 31st March, 2018 were ₹ 5,00,000 and ₹ 4,00,000 respectively. Partnership Deed provided to allow interest on capital @ 10% p.a. The firm earned net profit of ₹ 2,00,000 for the year ended 31st March, 2019.
Pass the Journal entry for interest on capital.
| Journal | |||||
| Date | Particulars | L.F. | Debit ₹ | Credit ₹ | |
| 2019 | |||||
| March 31 | Profit & Loss Appropriation A/c | Dr. | 90,000 | ||
| To Anita’s Capital A/c | 50,000 | ||||
| To Ankita’s Capital A/c | 40,000 | ||||
| (Capital Interest transferred to Profit & Loss Appropriation A/c) | |||||
Working Notes 1: Capital Interest Evaluation
Capital Interest Anita’s = 5,00,000 X (frac<10><100>) = ₹50,000
Capital Interest Ankita’s = 4,00,000 X (frac<10><100>) = ₹40,000
Question 20
Ashish and Aakash are partners sharing profit in the ratio of 3 : 2. Their Capital Accounts showed a credit balance of ₹ 5,00,000 and ₹ 6,00,000 respectively as on 31st March, 2019 after debit of drawings during the year of ₹ 1,50,000 and ₹ 1,00,000 respectively. Net profit for the year ended 31st March, 2019 was ₹ 5,00,000. Interest on capital is to be allowed @ 10% p.a.
Pass the Journal entry for interest on capital and prepare Profit and Loss Appropriation Account.
| Journal | |||||
| Date | Particulars | L.F. | Debit ₹ | Credit ₹ | |
| March 31 | Profit & Loss Appropriation A/c | Dr. | 1,35,000 | ||
| To Ashish’s Capital A/c | 65,000 | ||||
| To Aakash’s Capital A/c | 70,000 | ||||
| (Capital Interest transferred to Profit & Loss Appropriation A/c) | |||||
| 3,65,000 | |||||
| Profit & Loss Appropriation A/c | 2,19,000 | ||||
| To Ashish’s Capital A/c | 1,46,000 | ||||
| To Akash’s Capital A/c | |||||
| (Profit transferred to Partners’ Capital A/c) | |||||
| Profit and Loss Appropriation Account as on 31st March 2019 | |||||
| Dr. | Cr. | ||||
| Particulars | ₹ | Particulars | ₹ | ||
| Interest on Capital A/c: | Profit and Loss A/c | 5,00,000 | |||
| Ashish | 65,000 | ||||
| Aakash | 70,000 | 1,35,000 | |||
| Profit transferred to: | |||||
| Ashish’s Capital A/c | 2,19,000 | ||||
| Aakash’s Capital A/c | 1,46,000 | 3,65,000 | |||
| 5,00,000 | 5,00,000 | ||||
Working Notes 1: Opening Capital Evaluation
| Particulars | Ashish | Aakash |
| Capital at the end | 5,00,000 | 6,00,000 |
| Add: Drawings made | 1,50,000 | 1,00,000 |
| Capital at the beginning | 6,50,000 | 7,00,000 |
Working Notes 2: Capital Interest Evaluation
Ashish’s Capital Interest = 6,50,000 X (frac<10><100>) = ₹65,000
Askash’s Capital Interest = 7,00,000 X (frac<10><100>) = ₹70,000
Question 21
Naresh and Sukesh are partners with capital of ₹ 3,00,000 each as on 31st March, 2019. Naresh had withdrawn ₹ 50,000 against capital on 1st October, 2018 and also ₹ 1,00,000 besides the drawings against capital. Sukesh also had drawings of ₹ 1,00,000.
Interest on capital is to be allowed @ 10% p.a.
Net profit for the year was ₹ 2,00,000, which is yet to be distributed.
Pass the Journal entries for interest on capital and distribution of profit.
| Journal | |||||
| Date | Particulars | L.F. | Debit ₹ | Credit ₹ | |
| March 31 | Profit & Loss Appropriation A/c | Dr. | 82,500 | ||
| To Naresh’s Capital A/c | 42,500 | ||||
| To Sukesh’s Capital A/c | 40,000 | ||||
| (Capital interest transferred to Profit & Loss Appropriation A/c) | |||||
| Profit & Loss Appropriation A/c | Dr. | 1,17,500 | |||
| To Naresh’s Capital A/c | 58,750 | ||||
| To Sukesh’s Capital A/c | 58,750 | ||||
| (Profit transferred to Partners’ Capital A/c) | |||||
Working Notes 1 : Opening Capital Evaluation
| Particulars | Naresh | Sukesh |
| Capital at the end | 3,00,000 | 3,00,000 |
| Add: Capital drawings out | 50,000 | – |
| Add: Profit drawings against | 1,00,000 | 1,00,000 |
| Capital at the beginning | 4,50,000 | 4,00,000 |
Working Notes 1 : Capital Interest Evaluation
Question 22
On 1st April, 2013, Jay and Vijay entered into partnership for supplying laboratory equipment to government schools situated in remote and backward areas. They contributed capital of ₹ 80,000 and ₹ 50,000, respectively and agreed to share the profits in the ratio of 3 : 2. The partnership Deed provided that interest on capital shall be allowed at 9% per annum. During the year the firm earned a profit of ₹ 7,800. Showing your calculations clearly, prepare ‘Profit and Loss Appropriation Account’ of Jay and Vijay for the year ended 31st March, 2014.
| Profit and Loss Appropriation A/c as on March 2014 | ||||
| Dr. | Cr. | |||
| Particulars | ₹ | Particulars | ₹ | |
| Interest on Capital A/c: | Profit and Loss A/c | 7,800 | ||
| Jay | 4,800 | |||
| Vijay | 3,000 | 7,800 | ||
| 7,800 | 7,800 | |||
Working Notes 1: Capital interest Evaluation
Jay’s Capital = 80,000 X (frac<9><100>) = ₹7,200
Vijay’s Capital = 50,000 X (frac<9><100>) = ₹4,500
Total Interest = 7,200 + 4,500 = ₹ 11,700
Working Notes 2: Proportionate Interest on Capital Evaluation
Jay Proportionate Interest = (frac<7,200><11,700>) x 7,800 = ₹4,800
Vijay Proportionate Interest = (frac<4,500><11,700>) x 7,800 = ₹3,000
Question 23
Amar, Bhanu, and Charu are partners in a firm. Amar and Bhanu are to get an annual salary of ₹ 1,20,000 p.a. each as they are fully involved in the business. Net profit for the year is ₹ 4,80,000. Determine the share of profit to be credited to each partner.
| Profit and Loss Appropriation A/c | |||||
| Dr. | Cr. | ||||
| Particulars | ₹ | Particulars | ₹ | ||
| Salary: | Profit and Loss A/c | 4,80,000 | |||
| Amar | 1,20,000 | ||||
| Bhanu | 1,20,000 | 2,40,000 | |||
| Profit transferred to: | |||||
| Amar’s Capital A/c | 80,000 | ||||
| Bhanu’s Capital A/c | 80,000 | ||||
| Charu’s Capital A/c | 80,000 | 2,40,000 | |||
| 4,80,000 | 4,80,000 | ||||
Question 24
A, B and C are partners sharing profits and losses in the ratio of 2 : 2 : 1 respectively. A is entitled to a commission of 10% on the net profit. Net profit for the year is ₹ 1,10,000.
Determine the amount of commission payable to A.
Net Profit before commission = ₹ 1,10,000
Commission to A = 10% of Net Profit before commission was charged
Commission to A = Net Profit X (frac Question 25 X, Y and Determine the amount of commission payable to Net Profit before Commission = ₹ 2,20,000 Commission to Z = Net Profit 10% after charging commission Commission to A = Net Profit X (frac Question 26 A, B, C, and D are partners in a firm sharing profits as 4 : 3 : 2 : 1 respectively. It earned a profit of ₹ 1,80,000 for the year ended 31st March, 2018. As per the Partnership Deed, they are to charge a commission @ 20% of the profit after charging such commission which they will share as 2 : 3 : 2 : 3. You are required to show appropriation of profits among the partners. Working Notes 1 : Partners’ Commission Evaluation Partners’ Commission = Net Profit 20% after commission charged Partner’s Commission = Net Profit X (frac Partners commission in the ratio 2 : 3 : 2 : 3 A’s Commission = 30,000 X (frac<2><10>) = ₹ 6,000 B’s Commission = 30,000 X (frac<3><10>) = ₹ 9,000 C’s Commission = 30,000 X (frac<2><10>) = ₹ 6,000 D’s Commission = 30,000 X (frac<3><10>) = ₹ 9,000 Working Notes 2 : Partners’ Profit Share Evaluation Distribution of Profit = ₹ 1,80,000 − ₹ 30,000 = ₹ 1,50,000 Profit sharing ratio = 4 : 3 : 2 : 1 A’s Commission = 1,50,000 X (frac<4><10>) = ₹ 60,000 B’s Commission = 1,50,000 X (frac<3><10>) = ₹ 45,000 C’s Commission = 1,50,000 X (frac<2><10>) = ₹ 30,000 D’s Commission = 1,50,000 X (frac<1><10>) = ₹ 15,000 Question 27 X and Working Note 1: Commission Evaluation X’s Commission = Net Profit @ 10% after partners’ salaries. Profit after Partner’s Salaries = 4,20,000 − 1,45,000 = ₹ 2,75,000 X ‘s Commission = Profit after salaries X (frac<10><100>) Commission to Y = Net Profit @ 10% after partners’ salaries and Commission Profit after partners’ salaries and commission = 4,20,000 − 1,45,000 − 27,500 = ₹ 2,47,500 Y ‘s Commission = Profit after partners’ salaries and commission X (frac<10><100+Rate>) Working Note 1: Partner’s Profit Sharing Evaluation Profit’s for distribution = 4,20,000 − 1,45,000 − 50,000 = ₹ 2,25,000 Profit sharing ratio = 1 : 1 Profit sharing of X and Y each = 2,25,000 X (frac<1><2>) = ₹1,12,500 Question 28 Ram and Mohan, two partners, drew for their personal use ₹ 1,20,000 and ₹ 80,000. Interest is chargeable @ 6% p.a. on the drawings. What is the amount of interest chargeable from each partner? Since, the drawing’s date made by the partners is not mentioned, the interest drawing is evaluated on average basis for six months. Ram’s Drawing Interest = 1,20,000 X (frac<6><100>) X (frac<6><12>) = ₹3,600 Mohan’s Drawing Interest = 80,000 X (frac<6><100>) X (frac<6><12>) = ₹2,400 Question 29 Brij and Mohan are partners in a firm. They withdrew ₹ 48,000 and ₹ 36,000 respectively during the year evenly in the middle of every month. According to the partnership agreement, interest on drawings is to be charged @ 10% p.a. Calculate interest on drawings of the partners using the appropriate formula. Every month in the middle, drawings are made even, so, drawings interest is evaluated for six months. Brij’s Drawings Interest=₹ 48,000 X (frac<10><100>) X (frac<6><12>) = ₹2,400 Mohan’s Drawings Interest=₹ 36,000 X (frac<10><100>) X (frac<6><12>) = ₹1,800 Question 30 A and B are partners sharing profits equally. A drew regularly ₹ 4,000 in the beginning of every month for six months ended 30th September, 2019. Calculate interest on drawings @ 5% p.a. for a period of six months. Total Drawings = 4,000 X 6 = ₹ 24,000 Drawing Interest = Total Drawings X (frac
Z are partners sharing profits and losses equally. As per Partnership Deed,
Z is entitled to a commission of 10% on the net profit after charging such commission. The net profit before charging commission is ₹ 2,20,000.
Z.Profit and Loss Appropriation A/c as on 31st March, 2018 Dr. Cr. Particulars ₹ Particulars ₹ Partners’ Commission: Profit and Loss A/c (Net Profit) 1,80,000 A 6,000 B 9,000 C 6,000 D 9,000 30,000 Profit transferred to: A’s Capital A/c 60,000 B’s Capital A/c 45,000 C’s Capital A/c 30,000 D’s Capital A/c 15,000 1,50,000 1,80,000 1,80,000
Y are partners in a firm.
X is entitled to a salary of ₹ 10,000 per month and commission of 10% of the net profit after partners’ salaries but before charging commission.
Y is entitled to a salary of ₹ 25,000 p.a. and commission of 10% of the net profit after charging all commission and partners’ salaries. Net profit before providing for partners’ salaries and commission for the year ended 31st March, 2019 was ₹ 4,20,000. Show distribution of profit.Profit and Loss Appropriation A/c as on 31st March, 2019 Dr. Cr. Particulars ₹ Particulars ₹ Partners’ Salary: Profit and Loss A/c (Net Profit) 4,20,000 X (10,000 × 12) 1,20,000 Y 25,000 1,45,000 Partners’ Commission: X 27,500 Y 22,500 50,000 Profit transferred to: X’s Capital A/c 1,12,500 Y’s Capital A/c 1,12,500 2,25,000 4,20,000 4,20,000
