Can you give me answers for these Questions:-
1.Three Chatered Accountants X,Y,Z were partners from a partnership firm, sharing profits and losses in the ratio 3:2:1 subject to following conditons:
a) Z's share of profits is guaranteed to be not less than 30000 per annum.
b) Y gives gaurantee to the effect that the gross fee earned by him for the firm shal not be less than the average gross fee earned by him during the preceding five years when he was carrying on the profession alone(the average works out to be 50000)
The Profits for the year(year ended 31st March 2006) of the partnership is 1,50,000 . The gross fees earned by Y for the firm is 32,00.
You are requiered to Show P/L appropriation A/c (after giving effect to the above.)
2) A, B and C at present share profits and losses in the ratio 5:3:2 . They decide to share future profits and losses equally with effect from 1st April 2006. The goodwill of the firm has been valued at 90000, Show the necessary accounting treatment under each of the following alternative cases.
Case 1. When goodwill already appears in the books at 90,000
case 2: When the goodwill already appears in the books at 18,000
3).P,Q and R are partners in a firm. Thier Capital Accounts stood at 30,000,15,000 and 15,000 respectively on 1st Jan 2013.
As per the provisions of the deed:
a) R was to be allowed remunaration of 3000 per annum
b) Intrest @5% p.a was provided on capital
c)Profits were to be divided in the ratio 2:2:1.
Ignoring the above terms net profit of 18,000 for the year ended 31st Dec 2013. was divided among the three partners equally.
Pass an adjustment entry to rectify the error, Show working clearly.
4).P, Q and R were partners in a firm sharing profits in the ratio 5:3:2. On 1st Jan 2012,they decide to change theur profit sharing ratio ti equal but as they did not have equal contribution of capitals, so it was decided to incorporate provision of intrest on capital @10%P.A on the date of change of Goodwill of the firm valued @ Rs. 60.000.
a) You are requiered to pass journal entry for the treatment of goodwill on the change of Profit sharing Ratio,show workings clearly.
b) What value is shown by the partners in the above change of profit sharing ratio situation?Explain if they had any other alternative in this case.
b
Answer 1)
Assumption: As the fees earned by Y is not given clearly, it is assumed as Rs 32,000.
So, as Y did not earn the guaranteed fees, firstly Y's Capital A/c would be debited for balance amount & then the total profit would be distributed among partners.
Net Profit during the year is Rs 1,68,000 (1,50,000+18,000).
X's share = Rs 84,000
Y's share = Rs 56,000
Z's share =Rs 28,000 (less than guaranteed amount of Rs. 30,000)
So, deficiency of Rs. 2,000 would be borne by X and Y in 3:2.
X's final share: 84,000- (
Y's final share: 56,000- (
Z's final share : 28,000+1200+800 = Rs 30,000
|
Profit and Loss Appropriation Account
for the year ended March 31, 2006 |
|||||
| Particulars | Amount (Rs) |
Particulars | Amount (Rs) |
||
| Profit tfd to | Net Profit | 1,50,000 | |||
| X's Capital A/c | 82,800 |
Y's Capital A/c (Fees guaranteed not earned) | 18,000 | ||
| i.e. 50,000-32000 | |||||
| Y's Capital A/c | 55,200 | ||||
| Z's Capital A/c | 30,000 | ||||
| 1,68,000 | 1,68,000 | ||||
Answer 2) If their is change in partners' profit sharing ratio & goodwill already exists in the books of accounts, then goodwill is to be written off by debiting partner's capital accounts in old ratio.
Case 1 : For writing off old goodwill
| Journal | |||||
| Date | Particulars | L.F. | Debit Amount (Rs) |
Credit Amount (Rs) |
|
| A's Capital A/c | Dr. | 45,000 | |||
| B's Capital A/c | Dr. | 27,000 | |||
| C's Capital A/c | Dr. | 18,000 | |||
| To Goodwill A/c | 90,000 | ||||
| (Being goodwill existing in books written off in old ratio of 5:3:2) | |||||
Case 2 : For writing off old goodwill
| Journal | |||||
| Date | Particulars | L.F. | Debit Amount (Rs) |
Credit Amount (Rs) |
|
| A's Capital A/c | Dr. | 9,000 | |||
| B's Capital A/c | Dr. | 5,400 | |||
| C's Capital A/c | Dr. | 3,600 | |||
| To Goodwill A/c | 18,000 | ||||
| (Being goodwill existing in books written off in old ratio of 5:3:2) | |||||
| Partners | New Ratio (A) | Old Ratio (B) | Difference (A-B) |
| A | |
- |
|
| B | |
||
| C | |
For adjusting goodwill in gaining/sacrificing ratio (both Case-1 & Case-2)
| Journal | |||||
| Date | Particulars | L.F. | Debit Amount (Rs) |
Credit Amount (Rs) |
|
| B's Capital A/c | Dr. | 3,000 | |||
| C's Capital A/c | Dr. | 12,000 | |||
| To A's Capital A/c | 15,000 | ||||
| (Being goodwill valued distributed in sacrificing ratio of A i.e. 1/6 & gaining ratio of 1/30:4/30 among B:C) | |||||
Answer 3)
| Journal | |||||
| Date | Particulars | L.F. | Debit Amount (Rs) |
Credit Amount (Rs) |
|
| Q's Capital A/c | Dr. | 450 | |||
| To P's Capital A/c | 300 | ||||
| To R's Capital A/c | 150 | ||||
| (Being adjustment entry made as per working) | |||||
Working :
| Particulars | P's A/c | Q's A/c | R's A/c | Total |
| Remuneration Cr | 3,000 | 3,000 | ||
| Interest on capital Cr | 1500 | 750 | 750 | 3000 |
| Profit to be distributed (2:2:1) Cr | 4800 | 4800 | 2400 | 12000 |
| Total Cr | 6300 | 5550 | 6150 | 18000 |
| Profit wrongly distributed (1:1:1) Dr. | 6000 | 6000 | 6000 | 18000 |
| Net Effect | 300 Cr | 450 Dr | 150 Cr | Nil |
|
Profit and Loss Appropriation Account
for the year ended Dec 31, 2013 |
|||||
| Particulars | Amount (Rs) |
Particulars | Amount (Rs) |
||
| R's Capital A/c (Remuneration) | 3,000 | Gross Profit | 18,000 | ||
| To Interest on Capital | |||||
| P's Capital A/c (30,000 @ 5%) | 1500 | ||||
| Q's Capital A/c (15,000 @ 5%) | 750 | ||||
| R's Capital A/c (15,000 @ 5%) | 750 | ||||
| To Net Profit (balancing figure) | |||||
| P's Capital A/c ( |
4800 | ||||
| Q's Capital A/c ( |
4800 | ||||
| R's Capital A/c ( |
2400 | ||||
| Total | 18,000 | Total | 18,000 | ||
Answer 4) a)
Calculation of Gaining ratio
| Partners | New Ratio (A) | Old Ratio (B) | Difference (A-B) |
| P | |
- |
|
| Q | |
||
| R | |
| Journal | |||||
| Date | Particulars | L.F. | Debit Amount (Rs) |
Credit Amount (Rs) |
|
| Q's Capital A/c (60,000 x 1/30) | Dr. | 2,000 | |||
| R's Capital A/c (60,000 x 4/30) | Dr. | 8,000 | |||
| To P's Capital A/c (60,000 x 1/6) | 10,000 | ||||
| (Being goodwill valued distributed in sacrificing ratio of P as caluculated above) | |||||
Answer 4 b) The partners decided to change profit sharing ratio to 1:1:1, but their capital contribution was not equal & so they provided the provision of providing interest on capital@10%.So, the value shown here is equality.
Regards,