TS Grewal i (2014) Solutions for Class 12 Commerce Accountancy Chapter 1 Accounting For Partnership Firms Fundamentals are provided here with simple step-by-step explanations. These solutions for Accounting For Partnership Firms Fundamentals are extremely popular among class 12 Commerce students for Accountancy Accounting For Partnership Firms Fundamentals Solutions come handy for quickly completing your homework and preparing for exams. All questions and answers from the TS Grewal i (2014) Book of class 12 Commerce Accountancy Chapter 1 are provided here for you for free. You will also love the ad-free experience on Meritnation’s TS Grewal i (2014) Solutions. All TS Grewal i (2014) Solutions for class 12 Commerce Accountancy are prepared by experts and are 100% accurate.

Page No 1.64:

Question 1:

Answer:

  Items (Points) Provision in the Absence of Partnership Deed
(a) Salaries of Partners No Salary will be allowed to Partners.
(b) Interest on Partners’ Capitals No interest will be allowed to Partners on Capital
(c) Interest on Partners’ Loan 6% p.a. Interest will be allowed on the amount given by partners in the form of Loans and Advances to firm.
(d) Division of Profit Profits will be shared equally, it is irrespective the amount of capital contributed by partners
(e) Interest on Partners’ Drawings No Interest will be charged on the Drawings of Partners

 



Page No 1.65:

Question 2:

  Items (Points) Provision in the Absence of Partnership Deed
(a) Salaries of Partners No Salary will be allowed to Partners.
(b) Interest on Partners’ Capitals No interest will be allowed to Partners on Capital
(c) Interest on Partners’ Loan 6% p.a. Interest will be allowed on the amount given by partners in the form of Loans and Advances to firm.
(d) Division of Profit Profits will be shared equally, it is irrespective the amount of capital contributed by partners
(e) Interest on Partners’ Drawings No Interest will be charged on the Drawings of Partners

 

Answer:

(a) P is bound to pay Rs 20,000 together with profit of Rs 5,000 to the firm because this amount belongs to the firm.

Explanation: As per Principal and Agent relationship, P is principal as well as agent to the firm and to Q and R. As per this rule, any profit earned by an agent (P) by using the firm’s property is attributable to the firm.

(b) Q is liable to pay Rs 5,000 to the firm. As per the Partnership Act, 1932, every partner of a partnership firm is liable to the firm for any loss caused by his/her willful negligence.

Explanation: Here Q is solely responsible for the loss of Rs 1,000 because he used the property of the firm and also represented himself as a principal rather than an agent to the other partners and to the firm.

(c) P and Q may buy goods from A Ltd.

Explanation: As per Partnership Act, 1932, a partner has a right to buy and sell goods without consulting the other partners unless a Public Notice has been given by the partnership firm to restrict the partners to buy and sell.

(d) C will not be admitted because one of the partners P has not agreed to admit C.

Explanation: As per Partnership Act, a new partner cannot be admitted into a firm unless all the existing partners agree on the same decision. In other words, a new partner can be admitted in a partnership firm with the consent of all the existing partners.

Page No 1.65:

Question 3:

(a) P is bound to pay Rs 20,000 together with profit of Rs 5,000 to the firm because this amount belongs to the firm.

Explanation: As per Principal and Agent relationship, P is principal as well as agent to the firm and to Q and R. As per this rule, any profit earned by an agent (P) by using the firm’s property is attributable to the firm.

(b) Q is liable to pay Rs 5,000 to the firm. As per the Partnership Act, 1932, every partner of a partnership firm is liable to the firm for any loss caused by his/her willful negligence.

Explanation: Here Q is solely responsible for the loss of Rs 1,000 because he used the property of the firm and also represented himself as a principal rather than an agent to the other partners and to the firm.

(c) P and Q may buy goods from A Ltd.

Explanation: As per Partnership Act, 1932, a partner has a right to buy and sell goods without consulting the other partners unless a Public Notice has been given by the partnership firm to restrict the partners to buy and sell.

(d) C will not be admitted because one of the partners P has not agreed to admit C.

Explanation: As per Partnership Act, a new partner cannot be admitted into a firm unless all the existing partners agree on the same decision. In other words, a new partner can be admitted in a partnership firm with the consent of all the existing partners.

Answer:

 

Disputes

Possible Judgements

(a)

A wants that interest on capital should be allowed to the partners but B and C do not agree. 

As per Partnership Act, no interest on Capital will be allowed.

Reason: There is no partnership agreement among A, B and C regarding interest on capital.

(b)

B wants that the partners should be allowed to draw salary but A and C do not agree.

No salary will be allowed to any partner.

Reason: There is 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.

Interest on partner’s loan (C’s loan) will be allowed at 6% p.a.

Reason: As per Partnership Act, in the absence of partnership agreement, interest on partners loan is allowed at 6% p.a.

(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.

Profit will be shared equally and not in the capital ratio.

Reason: There is no partnership agreement.

 

Page No 1.65:

Question 4:

 

Disputes

Possible Judgements

(a)

A wants that interest on capital should be allowed to the partners but B and C do not agree. 

As per Partnership Act, no interest on Capital will be allowed.

Reason: There is no partnership agreement among A, B and C regarding interest on capital.

(b)

B wants that the partners should be allowed to draw salary but A and C do not agree.

No salary will be allowed to any partner.

Reason: There is 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.

Interest on partner’s loan (C’s loan) will be allowed at 6% p.a.

Reason: As per Partnership Act, in the absence of partnership agreement, interest on partners loan is allowed at 6% p.a.

(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.

Profit will be shared equally and not in the capital ratio.

Reason: There is no partnership agreement.

 

Answer:

Amount of Loan given by M to the firm (on July 01, 2012) = Rs 8,000

Time period (from July 01, 2012 to March 31, 2013) = 9 months

Interest rate = 6% p.a.

Note: There is no partnership agreement between the partners M and N regarding interest on loan. As per the Partnership Act, in case the partnership agreement is silent, interest on loan is allowed on the amount advanced or loan given by a partner to the firm at 6% p.a.

Page No 1.65:

Question 5:

Amount of Loan given by M to the firm (on July 01, 2012) = Rs 8,000

Time period (from July 01, 2012 to March 31, 2013) = 9 months

Interest rate = 6% p.a.

Note: There is no partnership agreement between the partners M and N regarding interest on loan. As per the Partnership Act, in case the partnership agreement is silent, interest on loan is allowed on the amount advanced or loan given by a partner to the firm at 6% p.a.

Answer:

Time Period (from July 01 to December 31, 1998) = 6 months

Interest rate = 6% p.a. (in the absence of partnership deed)

A and B will get Rs 450 individually as interest on loan for 6 months (from July 01 to December 1998) at 6% p.a.

Page No 1.65:

Question 6:

Time Period (from July 01 to December 31, 1998) = 6 months

Interest rate = 6% p.a. (in the absence of partnership deed)

A and B will get Rs 450 individually as interest on loan for 6 months (from July 01 to December 1998) at 6% p.a.

Answer:

Profit and Loss Account

as on March 31, 2012

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Mahesh’s Loan

150

Net Profit

15,200

Profit transferred to:

 

 

 

Mahesh’s Capital A/c

7,525

 

 

 

Ramesh’s Capital A/c

7,525

15,050

 

 

 

15,200

 

15,200

 

 

 

 

Working Note:

WN 1 Calculation of Interest on Mahesh’s Loan

Amount of Loan given by Mahesh = Rs 10,000

Time Period (from Jan 01 to March 31, 2012) = 3 months

WN 2: Calculation of Interest on Capital

No interest on Capital will be allowed to the partners

Note: There is no partnership deed between Mahesh and Ramesh. Therefore, as per Partnership Act:

(a) Interest on Loan will be allowed at 6% p.a.

(b) No interest on Partners’ Capital will be allowed and

(c) Profit after Interest on Mahesh’s loan will be distributed equally between Mahesh and Ramesh.

Page No 1.65:

Question 7:

Profit and Loss Account

as on March 31, 2012

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Mahesh’s Loan

150

Net Profit

15,200

Profit transferred to:

 

 

 

Mahesh’s Capital A/c

7,525

 

 

 

Ramesh’s Capital A/c

7,525

15,050

 

 

 

15,200

 

15,200

 

 

 

 

Working Note:

WN 1 Calculation of Interest on Mahesh’s Loan

Amount of Loan given by Mahesh = Rs 10,000

Time Period (from Jan 01 to March 31, 2012) = 3 months

WN 2: Calculation of Interest on Capital

No interest on Capital will be allowed to the partners

Note: There is no partnership deed between Mahesh and Ramesh. Therefore, as per Partnership Act:

(a) Interest on Loan will be allowed at 6% p.a.

(b) No interest on Partners’ Capital will be allowed and

(c) Profit after Interest on Mahesh’s loan will be distributed equally between Mahesh and Ramesh.

Answer:

Profit and Loss Appropriation Account

as on March 31, 2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Partners’ Capital-

 

Net Profit (27,100 - 600)

26,500

Black

1,500

 

 

 

White

1,000

2,500

 

 

Profit transferred to-

 

 

 

Black’s Capital A/c

12,000

 

 

 

White’s Capital A/c

12,000

24,000

 

 

 

26,500

 

26,500

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Interest on White’s Loan

Notes:

1. As per Partnership Agreement, interest on capital to the partners is to be allowed at 5%.

2. There is no partnership agreement for interest on loan provided by the partner. Hence, interest on loan is allowed at 6%.

3. There is no partnership agreement for salary to the partners, therefore no salary will be provided to any of the partner.

4. Also, in the absence of a partnership agreement regarding sharing of profits and losses, profits will be shared equally by the partners.



Page No 1.66:

Question 8:

Profit and Loss Appropriation Account

as on March 31, 2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Partners’ Capital-

 

Net Profit (27,100 - 600)

26,500

Black

1,500

 

 

 

White

1,000

2,500

 

 

Profit transferred to-

 

 

 

Black’s Capital A/c

12,000

 

 

 

White’s Capital A/c

12,000

24,000

 

 

 

26,500

 

26,500

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Interest on White’s Loan

Notes:

1. As per Partnership Agreement, interest on capital to the partners is to be allowed at 5%.

2. There is no partnership agreement for interest on loan provided by the partner. Hence, interest on loan is allowed at 6%.

3. There is no partnership agreement for salary to the partners, therefore no salary will be provided to any of the partner.

4. Also, in the absence of a partnership agreement regarding sharing of profits and losses, profits will be shared equally by the partners.

Answer:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital:

 

Profit and Loss A/c (Net Profit)

80,000

A

6,000

 

 

 

B

3,600

9,600

 

 

Salary to B (Rs 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:

WN1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Divisible Profit = 80,000 9,600 36,000 = 34,400

Page No 1.66:

Question 9:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital:

 

Profit and Loss A/c (Net Profit)

80,000

A

6,000

 

 

 

B

3,600

9,600

 

 

Salary to B (Rs 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:

WN1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Divisible Profit = 80,000 9,600 36,000 = 34,400

Answer:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital:

 

Profit and Loss A/c (Net Profit after Z’s salary)

4,00,000

X

50,000

 

 

 

Y

50,000

 

 

 

Z

25,000

1,25000

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

1,10,000

 

 

 

Y’s Capital A/c

1,10,000

 

 

 

Z’s Capital A/c

55,000

2,75,000

 

 

 

4,00,000

 

4,00,000

 

 

 

 

Working Notes:

WN 1 Salary to Z has not been debited to Profit and Loss Appropriation Account. This is because Profit of Rs 4,00,000 is given after adjusting the Z’s salary.

WN 2 Calculation of Interest on Capital

WN 3 Calculation of Profit Share of each Partner

Divisible of Profit after Interest on Capital = Rs 4,00,000 − Rs 1,25,000 = Rs 2,75,000

Profit sharing ratio = 2 : 2 : 1

Page No 1.66:

Question 10:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital:

 

Profit and Loss A/c (Net Profit after Z’s salary)

4,00,000

X

50,000

 

 

 

Y

50,000

 

 

 

Z

25,000

1,25000

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

1,10,000

 

 

 

Y’s Capital A/c

1,10,000

 

 

 

Z’s Capital A/c

55,000

2,75,000

 

 

 

4,00,000

 

4,00,000

 

 

 

 

Working Notes:

WN 1 Salary to Z has not been debited to Profit and Loss Appropriation Account. This is because Profit of Rs 4,00,000 is given after adjusting the Z’s salary.

WN 2 Calculation of Interest on Capital

WN 3 Calculation of Profit Share of each Partner

Divisible of Profit after Interest on Capital = Rs 4,00,000 − Rs 1,25,000 = Rs 2,75,000

Profit sharing ratio = 2 : 2 : 1

Answer:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital:

 

Profit and Loss A/c (Net Profit)

2,16,000

Amit

20,000

 

Interest on Drawings A/c:

 

Vijay

15,000

35,000

Amit

2,200

 

Salary to:

 

Vijay

2,500

4,700

Amit (Rs 2,000 × 12)

24,000

 

 

 

Vijay (Rs 3,000 × 12)

36,000

60,000

 

 

Profit transferred to:

 

 

 

Amit’s Capital A/c

75,420

 

 

 

Vijay’s Capital A/c

50,280

1,25,700

 

 

 

2,20,700

 

2,20,700

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Divisible Profit = 2,16,000 + 4,700 − 35,000 − 60,000 = Rs 1, 25,700

Profit sharing ratio = 3 : 2

Page No 1.66:

Question 11:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital:

 

Profit and Loss A/c (Net Profit)

2,16,000

Amit

20,000

 

Interest on Drawings A/c:

 

Vijay

15,000

35,000

Amit

2,200

 

Salary to:

 

Vijay

2,500

4,700

Amit (Rs 2,000 × 12)

24,000

 

 

 

Vijay (Rs 3,000 × 12)

36,000

60,000

 

 

Profit transferred to:

 

 

 

Amit’s Capital A/c

75,420

 

 

 

Vijay’s Capital A/c

50,280

1,25,700

 

 

 

2,20,700

 

2,20,700

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Divisible Profit = 2,16,000 + 4,700 − 35,000 − 60,000 = Rs 1, 25,700

Profit sharing ratio = 3 : 2

Answer:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on  Capital:

 

Profit and Loss A/c (Net Profit)

1,72,000

A

5,000

 

 

 

B

5,000

 

 

 

C

10,000

20,000

 

 

Salary to C

 

12,000

 

 

Profit transferred to:

 

 

 

A’s Current A/c

50,000

 

 

 

B’s Current A/c

44,000

 

 

 

C’s Current A/c

46,000

1,40,000

 

 

 

1,72,000

 

1,72,000

 

 

 

 

Journal Entries

Date

Particulars

 

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

 

Interest on Capital A/c

Dr.

 

20,000

 

 

  To A’s Current A/c

 

 

 

5,000

 

  To B’s Current A/c

 

 

 

5,000

 

  To C’s Current A/c

 

 

 

10,000

 

(Interest on partners’ capital allowed to partners)

 

 

 

 

 

 

 

 

 

 

 

Salary A/c

Dr.

 

12,000

 

 

  To C’s Current A/c

 

 

 

12,000

 

(Salary allowed to C)

 

 

 

 

 

 

 

 

 

 

 

Profit and Loss Appropriation A/c

Dr.

 

1,40,000

 

 

  To A’s Current A/c

 

 

 

50,000

 

  To B’s Current A/c

 

 

 

44,000

 

  To C’s Current A/c

 

 

 

46,000

 

(Profit available for distribution transferred to partners’ current accounts)

 

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Profits available for Distribution = 1,72,000 − 20,000 − 12,000

= Rs 1,40,000

1. Distribution of first Rs 20,000 in the Capital Ratio i.e. 1:1:2

2. Distribution of Next Rs 30,000 in the ratio of 5:3:2

3. Remaining Profit available for distribution = Rs 1,40,000 − 20,000 − 30,000 = Rs 90,000

This profit of Rs 90,000 is to be shared equally by the partners.

Therefore,

Total Profit Share of A = 5,000 + 15,000 + 30,000 = Rs 50,000

Total Profit Share of B = 5,000 + 9,000 + 30,000 = Rs 44,000

Total Profit Share of C = 10,000 + 6,000 + 30,000 = Rs 46,000

Page No 1.66:

Question 12:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on  Capital:

 

Profit and Loss A/c (Net Profit)

1,72,000

A

5,000

 

 

 

B

5,000

 

 

 

C

10,000

20,000

 

 

Salary to C

 

12,000

 

 

Profit transferred to:

 

 

 

A’s Current A/c

50,000

 

 

 

B’s Current A/c

44,000

 

 

 

C’s Current A/c

46,000

1,40,000

 

 

 

1,72,000

 

1,72,000

 

 

 

 

Journal Entries

Date

Particulars

 

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

 

Interest on Capital A/c

Dr.

 

20,000

 

 

  To A’s Current A/c

 

 

 

5,000

 

  To B’s Current A/c

 

 

 

5,000

 

  To C’s Current A/c

 

 

 

10,000

 

(Interest on partners’ capital allowed to partners)

 

 

 

 

 

 

 

 

 

 

 

Salary A/c

Dr.

 

12,000

 

 

  To C’s Current A/c

 

 

 

12,000

 

(Salary allowed to C)

 

 

 

 

 

 

 

 

 

 

 

Profit and Loss Appropriation A/c

Dr.

 

1,40,000

 

 

  To A’s Current A/c

 

 

 

50,000

 

  To B’s Current A/c

 

 

 

44,000

 

  To C’s Current A/c

 

 

 

46,000

 

(Profit available for distribution transferred to partners’ current accounts)

 

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Profits available for Distribution = 1,72,000 − 20,000 − 12,000

= Rs 1,40,000

1. Distribution of first Rs 20,000 in the Capital Ratio i.e. 1:1:2

2. Distribution of Next Rs 30,000 in the ratio of 5:3:2

3. Remaining Profit available for distribution = Rs 1,40,000 − 20,000 − 30,000 = Rs 90,000

This profit of Rs 90,000 is to be shared equally by the partners.

Therefore,

Total Profit Share of A = 5,000 + 15,000 + 30,000 = Rs 50,000

Total Profit Share of B = 5,000 + 9,000 + 30,000 = Rs 44,000

Total Profit Share of C = 10,000 + 6,000 + 30,000 = Rs 46,000

Answer:

 

Profit and Loss Adjustment Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Manager’s Commission (30,000×5%)

1,500

Profit and Loss A/c (Net Profit after Y’s salary)

24,000

 

 

Y’s Salary

6,000

Profit transferred to Profit and Loss

 

 

 

Appropriation A/c

28,500

 

 

 

30,000

 

30,000

 

 

 

 

 

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Salary to Y

6,000

Profit and Loss Adjustment A/c

28,500

Interest on Capital:

 

(After manager’s commission)

 

X

4,000

 

 

 

Y

3,000

7,000

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

9,300

 

 

 

Y’s Capital A/c

6,200

15,500

 

 

 

28,500

 

28,500

 

 

 

 

Working Notes:

WN 1 Calculation of Manager’s Commission

Profit for making Managers’ Commission = 24,000 + 6,000 (Y’s Salary) = Rs 30,000

WN 2 Calculation of Interest on Capital

WN 3 Calculation of Profit Share of each Partner

Profit available for distribution = 28,500 − 6,000 − 7,000 = Rs 15,500

Page No 1.66:

Question 13:

 

Profit and Loss Adjustment Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Manager’s Commission (30,000×5%)

1,500

Profit and Loss A/c (Net Profit after Y’s salary)

24,000

 

 

Y’s Salary

6,000

Profit transferred to Profit and Loss

 

 

 

Appropriation A/c

28,500

 

 

 

30,000

 

30,000

 

 

 

 

 

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Salary to Y

6,000

Profit and Loss Adjustment A/c

28,500

Interest on Capital:

 

(After manager’s commission)

 

X

4,000

 

 

 

Y

3,000

7,000

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

9,300

 

 

 

Y’s Capital A/c

6,200

15,500

 

 

 

28,500

 

28,500

 

 

 

 

Working Notes:

WN 1 Calculation of Manager’s Commission

Profit for making Managers’ Commission = 24,000 + 6,000 (Y’s Salary) = Rs 30,000

WN 2 Calculation of Interest on Capital

WN 3 Calculation of Profit Share of each Partner

Profit available for distribution = 28,500 − 6,000 − 7,000 = Rs 15,500

Answer:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on  Capital:

 

Profit and loss A/c (Net Profit)

3,50,000

D

50,000

 

Interest on Drawings A/c:

 

E

70,000

 

D

4,400

 

F

80,000

2,00,000

E

4,500

8,900

Salary to F (Rs 10,000 × 12)

1,20,000

 

 

Profit transferred to: Capital A/c

 

 

 

D’s Capital A/c

9,725

 

 

 

E’s Capital A/c

13,615

 

 

 

F’s Capital A/c

15,560

38,900

 

 

 

3,58,900

 

3,58,900

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Interest on Drawings

No interest shall be charged on F’s drawings. This is because; F withdrew the amount at the end of year (on December 31, 2009).

WN 3 Calculation of Profit Share of each Partner

Profit available for distribution = 3,50,000 + 8,900 − 2,00,000 − 1,20,000 = 38,900

Profit Sharing Ratio = 5:7:8



Page No 1.67:

Question 14:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on  Capital:

 

Profit and loss A/c (Net Profit)

3,50,000

D

50,000

 

Interest on Drawings A/c:

 

E

70,000

 

D

4,400

 

F

80,000

2,00,000

E

4,500

8,900

Salary to F (Rs 10,000 × 12)

1,20,000

 

 

Profit transferred to: Capital A/c

 

 

 

D’s Capital A/c

9,725

 

 

 

E’s Capital A/c

13,615

 

 

 

F’s Capital A/c

15,560

38,900

 

 

 

3,58,900

 

3,58,900

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Interest on Drawings

No interest shall be charged on F’s drawings. This is because; F withdrew the amount at the end of year (on December 31, 2009).

WN 3 Calculation of Profit Share of each Partner

Profit available for distribution = 3,50,000 + 8,900 − 2,00,000 − 1,20,000 = 38,900

Profit Sharing Ratio = 5:7:8

Answer:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Salary to Prem (Rs 2,500 × 12)

30,000

Profit and Loss A/c (Net Profit)

90,575

Commission to Manoj

10,000

Interest on Drawings A/c:

 

Interest on Capital:

 

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:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Profit available for distribution = 90,575 + 1,675 − 30,000 − 10,000 − 17,500

= Rs 34,750

Profit sharing ratio = 3 : 2

Page No 1.67:

Question 15:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Salary to Prem (Rs 2,500 × 12)

30,000

Profit and Loss A/c (Net Profit)

90,575

Commission to Manoj

10,000

Interest on Drawings A/c:

 

Interest on Capital:

 

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:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Profit available for distribution = 90,575 + 1,675 − 30,000 − 10,000 − 17,500

= Rs 34,750

Profit sharing ratio = 3 : 2

Answer:

 

In this question, date of drawings made by the partners is not given. Therefore, interest on drawings is calculated on average basis for a period of six months.

 

Page No 1.67:

Question 16:

 

In this question, date of drawings made by the partners is not given. Therefore, interest on drawings is calculated on average basis for a period of six months.

 

Answer:

 

Since, the drawings are made evenly at the middle of every month, therefore interest on drawings is calculated for a period of six months.

 

 

Page No 1.67:

Question 17:

 

Since, the drawings are made evenly at the middle of every month, therefore interest on drawings is calculated for a period of six months.

 

 

Answer:

Page No 1.67:

Question 18:

Answer:

Page No 1.67:

Question 19:

Answer:

Date

Amount

(Rs)

(I)

No of Months

(II)

Product

(Rs)

(I ×II)

1/5/2013

4,000

11

44,000

1/8/2013

10,000

8

80,000

30/9/2013

4,000

6

24,000

31/1/2014

12,000

2

24,000

1/3/2014

4,000

1

4,000

Sum of Product

1,76,000

 

 

Rate of Interest = 7.5% p.a.

 

Page No 1.67:

Question 20:

Date

Amount

(Rs)

(I)

No of Months

(II)

Product

(Rs)

(I ×II)

1/5/2013

4,000

11

44,000

1/8/2013

10,000

8

80,000

30/9/2013

4,000

6

24,000

31/1/2014

12,000

2

24,000

1/3/2014

4,000

1

4,000

Sum of Product

1,76,000

 

 

Rate of Interest = 7.5% p.a.

 

Answer:

Total Drawings = 7,500 × 4 = Rs 30,000

Interest Rate = 10% p.a.

Case (a)

When equal amount is withdrawn in the beginning of each quarter, the interest on drawings is calculated for an average period of 7.5 months

Case (b)

When equal amount is withdrawn at the end of each quarter, the interest on drawings is calculated for an average period of 4.5 months

Case (c) 

When equal amount is withdrawn in the middle of each quarter, the interest on drawings is calculated for an average period of 6 months

Page No 1.67:

Question 21:

Total Drawings = 7,500 × 4 = Rs 30,000

Interest Rate = 10% p.a.

Case (a)

When equal amount is withdrawn in the beginning of each quarter, the interest on drawings is calculated for an average period of 7.5 months

Case (b)

When equal amount is withdrawn at the end of each quarter, the interest on drawings is calculated for an average period of 4.5 months

Case (c) 

When equal amount is withdrawn in the middle of each quarter, the interest on drawings is calculated for an average period of 6 months

Answer:

Calculation of Interest on A’s Capital

Date

Capital

×

Period

=

Product

April 01, 2013 to June 30, 2013

50,000

×

3

=

1,50,000

July 01, 2013 to March 31, 2014

60,000

×

9

=

5,40,000

Sum of Product

 

6,90,000

 

 

Calculation of Interest on B’s Capital

Date

Capital

×

Period

=

Product

April 01, 2013 to June 30, 2013

40,000

×

3

=

1,20,000

July 01, 2013 to March 31, 2014

41,000

×

9

=

3,69,000

Sum of Product

 

4,89,000

 

 



Page No 1.68:

Question 22:

Calculation of Interest on A’s Capital

Date

Capital

×

Period

=

Product

April 01, 2013 to June 30, 2013

50,000

×

3

=

1,50,000

July 01, 2013 to March 31, 2014

60,000

×

9

=

5,40,000

Sum of Product

 

6,90,000

 

 

Calculation of Interest on B’s Capital

Date

Capital

×

Period

=

Product

April 01, 2013 to June 30, 2013

40,000

×

3

=

1,20,000

July 01, 2013 to March 31, 2014

41,000

×

9

=

3,69,000

Sum of Product

 

4,89,000

 

 

Answer:

Calculation of Interest on Capital

Case (a) 

Where there is no clean agreement except for interest on capitals

Profit for the year ended = Rs 1,500

Total amount of interest = Rs 1,800

Here, total amount of interest on capital is more than the profit available for distribution. Therefore, profit of Rs 1,500 is distributed between X and Y in the ratio of their interest on capital.

Particulars

   X

:

Y

Interest on Capital

1,200

:

600

or, Ratio of interest on Capital

2

:

1

Case (b)

In case, there is a clear agreement that the interest on capital will be allowed even if the firm has incurred loss, then the whole amount of interest on capital is to be allowed to the partners.

Total Profit of the firm = Rs 1,500

Total amount of Interest on Capital = Rs 1,800 (i.e. Rs 1,200 + Rs 600). Therefore, loss to the firm amounts to Rs 300. This loss is to shared by X and Y in their profit sharing ratio that is 2 : 3. 

Page No 1.68:

Question 23:

Calculation of Interest on Capital

Case (a) 

Where there is no clean agreement except for interest on capitals

Profit for the year ended = Rs 1,500

Total amount of interest = Rs 1,800

Here, total amount of interest on capital is more than the profit available for distribution. Therefore, profit of Rs 1,500 is distributed between X and Y in the ratio of their interest on capital.

Particulars

   X

:

Y

Interest on Capital

1,200

:

600

or, Ratio of interest on Capital

2

:

1

Case (b)

In case, there is a clear agreement that the interest on capital will be allowed even if the firm has incurred loss, then the whole amount of interest on capital is to be allowed to the partners.

Total Profit of the firm = Rs 1,500

Total amount of Interest on Capital = Rs 1,800 (i.e. Rs 1,200 + Rs 600). Therefore, loss to the firm amounts to Rs 300. This loss is to shared by X and Y in their profit sharing ratio that is 2 : 3. 

Answer:

Calculation of Interest on A’s Capital

Date

Capital

×

Period

=

Product

April 01,  2013 to Sept 30, 2013

15,00,000

×

6

=

90,00,000

Oct 01, 2013 to March 31, 2014

12,00,000

×

6

=

72,00,000

Sum of Product

 

1,62,00,000

 

 

Calculation of Interest on B’s Capital

Date

Capital

×

Period

=

Product

April 01,  2013 to Sept 30, 2013

9,00,000

×

6

=

54,00,000

Oct 01, 2013 to March 31, 2014

12,00,000

×

6

=

72,00,000

Sum of Product

 

1,26,00,000

 

 

Page No 1.68:

Question 24:

Calculation of Interest on A’s Capital

Date

Capital

×

Period

=

Product

April 01,  2013 to Sept 30, 2013

15,00,000

×

6

=

90,00,000

Oct 01, 2013 to March 31, 2014

12,00,000

×

6

=

72,00,000

Sum of Product

 

1,62,00,000

 

 

Calculation of Interest on B’s Capital

Date

Capital

×

Period

=

Product

April 01,  2013 to Sept 30, 2013

9,00,000

×

6

=

54,00,000

Oct 01, 2013 to March 31, 2014

12,00,000

×

6

=

72,00,000

Sum of Product

 

1,26,00,000

 

 

Answer:

Interest on capital is calculated on the opening balance of partner’s capital.

Calculation of Capital balance at the beginning

Particulars

Ram

Mohan

Capital at the end

24,000

18,000

Less: Profit already credited (1:1)

(8,000)

(8,000)

Add: Drawings already debited

4,000

6,000

Capital at the beginning

20,000

16,000

 

 

 

Page No 1.68:

Question 25:

Interest on capital is calculated on the opening balance of partner’s capital.

Calculation of Capital balance at the beginning

Particulars

Ram

Mohan

Capital at the end

24,000

18,000

Less: Profit already credited (1:1)

(8,000)

(8,000)

Add: Drawings already debited

4,000

6,000

Capital at the beginning

20,000

16,000

 

 

 

Answer:

Calculation of Interest on Y’s Capital

Particulars

Amount

Rs

Y’s Capital balance as on March 31, 2014

40,000

Less: Profit adjusted in Y’s Capital

(5,000)

Add: Drawings

15,000

Capital Balance at the beginning (as on April 01, 2013)

50,000

 

 

Page No 1.68:

Question 26:

Calculation of Interest on Y’s Capital

Particulars

Amount

Rs

Y’s Capital balance as on March 31, 2014

40,000

Less: Profit adjusted in Y’s Capital

(5,000)

Add: Drawings

15,000

Capital Balance at the beginning (as on April 01, 2013)

50,000

 

 

Answer:

Calculation of Capital at the beginning (as on April 01, 2011)

Particulars

Long

Short

Capital at the end

1,60,000

1,40,000

Less: Adjusted  Profit (1,50,000 – 1,00,000) in 1:1 ratio

(25,000)

(25,000)

Add: Adjusted Drawings

-

50,000

Capital in the beginning

1,35,000

1,65,000

 

 

 

Page No 1.68:

Question 27:

Calculation of Capital at the beginning (as on April 01, 2011)

Particulars

Long

Short

Capital at the end

1,60,000

1,40,000

Less: Adjusted  Profit (1,50,000 – 1,00,000) in 1:1 ratio

(25,000)

(25,000)

Add: Adjusted Drawings

-

50,000

Capital in the beginning

1,35,000

1,65,000

 

 

 

Answer:

Calculation of Interest on Capital

Calculation of Interest on Drawings

Interest on A’s Drawings

Year

2010

Drawings

×

Period

=

Product

March 31 to Dec. 31

500

×

9

=

4,500

April 30 to Dec. 31

600

×

8

=

4,800

July 01 to Dec 31

450

×

6

=

2,700

Dec 01 to Dec 31

1400

×

1

=

1,400

Sum of Product

13,400

 

 

Interest on B’s Drawings

Total Drawings = 300 ×12 = Rs 3,600

Average Period = 5.5 months



Page No 1.69:

Question 28:

Calculation of Interest on Capital

Calculation of Interest on Drawings

Interest on A’s Drawings

Year

2010

Drawings

×

Period

=

Product

March 31 to Dec. 31

500

×

9

=

4,500

April 30 to Dec. 31

600

×

8

=

4,800

July 01 to Dec 31

450

×

6

=

2,700

Dec 01 to Dec 31

1400

×

1

=

1,400

Sum of Product

13,400

 

 

Interest on B’s Drawings

Total Drawings = 300 ×12 = Rs 3,600

Average Period = 5.5 months

Answer:

Net Profit before charging commission = Rs 1,10,000

Commission to A = 10% of on Net Profit before charging such commission

 

 

Page No 1.69:

Question 29:

Net Profit before charging commission = Rs 1,10,000

Commission to A = 10% of on Net Profit before charging such commission

 

 

Answer:

Net Profit before charging Commission = Rs 2,20,000

Commission to Z = 10% of on Net Profit after charging such commission

 

 

Page No 1.69:

Question 30:

Net Profit before charging Commission = Rs 2,20,000

Commission to Z = 10% of on Net Profit after charging such commission

 

 

Answer:

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

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

 

 

 

 

Working Notes:

WN 1 Calculation of Commission

Commission to X = 10% of Net Profit after partners’ salaries but before charging such commission

Profit after Partners’ Salaries = 4,20,000 1,45,000 = Rs 2,75,000

Commission to Y = 10% of Net Profit after charging Commission and Partners’ Salaries

Profit after commission and partners’ salaries = 4,20,000 1,45,000 27,500

= Rs 2,47,500

WN 2 Calculation of Profit Share of each Partner

Profit available for distribution = 4,20,000 − 1,45,000 − 50,000 = Rs 2,25,000

Profit sharing ratio = 1 : 1

Page No 1.69:

Question 31:

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

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

 

 

 

 

Working Notes:

WN 1 Calculation of Commission

Commission to X = 10% of Net Profit after partners’ salaries but before charging such commission

Profit after Partners’ Salaries = 4,20,000 1,45,000 = Rs 2,75,000

Commission to Y = 10% of Net Profit after charging Commission and Partners’ Salaries

Profit after commission and partners’ salaries = 4,20,000 1,45,000 27,500

= Rs 2,47,500

WN 2 Calculation of Profit Share of each Partner

Profit available for distribution = 4,20,000 − 1,45,000 − 50,000 = Rs 2,25,000

Profit sharing ratio = 1 : 1

Answer:

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

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

 

 

 

 

Working Notes:

WN 1 Calculation of Partners’ Commission

Partners’ Commission = 20% on Net Profit after such commission

This commission is to be shared by the partners in the ratio of 2 : 3 : 2 : 3

WN 2 Calculation of Profit Share of each Partner

Profit available for Distribution = 1,80,000 − 30,000 = Rs 1,50,000

Profit sharing ratio = 4 : 3 : 2 : 1

Page No 1.69:

Question 32:

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

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

 

 

 

 

Working Notes:

WN 1 Calculation of Partners’ Commission

Partners’ Commission = 20% on Net Profit after such commission

This commission is to be shared by the partners in the ratio of 2 : 3 : 2 : 3

WN 2 Calculation of Profit Share of each Partner

Profit available for Distribution = 1,80,000 − 30,000 = Rs 1,50,000

Profit sharing ratio = 4 : 3 : 2 : 1

Answer:

Amount advanced by the Partners = Rs 30,000

Profit sharing ratio = 3 : 2

Time Period (from October 01, 2009 to March 31, 2010) = 6 months

Interest rate = 6% p.a.

Calculation of Interest on Advances

Note: In the absence of a partnership agreement regarding rate of interest on loans and advances, interest is provided at 6% p.a.

 

 

Page No 1.69:

Question 33:

Amount advanced by the Partners = Rs 30,000

Profit sharing ratio = 3 : 2

Time Period (from October 01, 2009 to March 31, 2010) = 6 months

Interest rate = 6% p.a.

Calculation of Interest on Advances

Note: In the absence of a partnership agreement regarding rate of interest on loans and advances, interest is provided at 6% p.a.

 

 

Answer:

Calculation of Interest on Loan

Case 1- If Profits before any interest for the year amounted to Rs 21,000

Profit and Loss Account

for the year ended March 31, 2012

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on X’s Loan

2,400

Profit (before interest)

21,000

Interest on Y’s Loan

1,200

 

 

Profit transferred to

 

 

 

X’s Capital A/c (17,400 × 2/5)

6,960

 

 

 

Y’s Capital A/c (17,400 × 3/5)

10,440

17,400

 

 

 

21,000

 

21,000

 

 

 

 

Case 2- If Profits before any interest for the year amounted to Rs 3,000

Profit and Loss Account

for the year ended March 31, 2012

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

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- If Profits before any interest for the year amounted to Rs 5,000

Profit and Loss Account

for the year ended March 31, 2012

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

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

 

 

 

 

 

Page No 1.69:

Question 34:

Calculation of Interest on Loan

Case 1- If Profits before any interest for the year amounted to Rs 21,000

Profit and Loss Account

for the year ended March 31, 2012

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on X’s Loan

2,400

Profit (before interest)

21,000

Interest on Y’s Loan

1,200

 

 

Profit transferred to

 

 

 

X’s Capital A/c (17,400 × 2/5)

6,960

 

 

 

Y’s Capital A/c (17,400 × 3/5)

10,440

17,400

 

 

 

21,000

 

21,000

 

 

 

 

Case 2- If Profits before any interest for the year amounted to Rs 3,000

Profit and Loss Account

for the year ended March 31, 2012

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

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- If Profits before any interest for the year amounted to Rs 5,000

Profit and Loss Account

for the year ended March 31, 2012

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

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

 

 

 

 

 

Answer:

Profit and Loss Account

for the year ended March 31, 2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Loss (before interest)

9,000

Loss transferred to:

 

Interest on Bat’s loan

7,200

Bat’s Capital A/c

7,920

 

Interest on Ball’s loan

3,600

Ball’s Capital A/c

11,880

19,800

 

19,800

 

19,800

 

 

 

 

Working Notes: WN 1 Interest on Partner’s Loan 

WN 2 Distribution of Loss to the Partners 

Loss after Interest on Partners’ Loan = 9,000 + 7,200 + 3,600 = Rs 19,800



Page No 1.70:

Question 35:

Profit and Loss Account

for the year ended March 31, 2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Loss (before interest)

9,000

Loss transferred to:

 

Interest on Bat’s loan

7,200

Bat’s Capital A/c

7,920

 

Interest on Ball’s loan

3,600

Ball’s Capital A/c

11,880

19,800

 

19,800

 

19,800

 

 

 

 

Working Notes: WN 1 Interest on Partner’s Loan 

WN 2 Distribution of Loss to the Partners 

Loss after Interest on Partners’ Loan = 9,000 + 7,200 + 3,600 = Rs 19,800

Answer:

Profit and Loss Account

for the year ended March 31, 2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on A’s Loan

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:

WN 1 Calculation of Interest on Loan

As per the Partnership Act, if there is no partnership agreement regarding rate of interest on loan, it is provided at 6% p.a.

Amount of Loan = Rs 8,000

Time Period (from October 01 to March 31) = 6 months

WN 2 Calculation of Profit Share of each Partner

In the absence of partnership deed, profits of a firm are distributed equally among all the partners.

Profit after Interest on A’s loan = 15,000 − 240 = Rs 14,760

Page No 1.70:

Question 36:

Profit and Loss Account

for the year ended March 31, 2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on A’s Loan

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:

WN 1 Calculation of Interest on Loan

As per the Partnership Act, if there is no partnership agreement regarding rate of interest on loan, it is provided at 6% p.a.

Amount of Loan = Rs 8,000

Time Period (from October 01 to March 31) = 6 months

WN 2 Calculation of Profit Share of each Partner

In the absence of partnership deed, profits of a firm are distributed equally among all the partners.

Profit after Interest on A’s loan = 15,000 − 240 = Rs 14,760

Answer:

Profit and Loss Appropriation Account

for the year ended 2013-2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital:

 

Profit and Loss A/c (Net Profit)

8,000

C

600

 

 

 

D

360

960

 

 

Salary to D (Rs 300 × 12)

3,600

 

 

Profit transferred to :

 

 

 

C’s Capital A/c

1,720

 

 

 

D’s Capital A/c

1,720

3,440

 

 

 

8,000

 

8,000

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Profit available for distribution = 8,000 − 960 − 3,600 = Rs 3,440

Total amount received by C = Interest on Capital + Profit Share = 600 + 1,720 = Rs 2,320

Total amount received by D = Interest on Capital + Salary + Profit Share = 360 + 3,600 + 1,720 = Rs 5,680

Page No 1.70:

Question 37:

Profit and Loss Appropriation Account

for the year ended 2013-2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital:

 

Profit and Loss A/c (Net Profit)

8,000

C

600

 

 

 

D

360

960

 

 

Salary to D (Rs 300 × 12)

3,600

 

 

Profit transferred to :

 

 

 

C’s Capital A/c

1,720

 

 

 

D’s Capital A/c

1,720

3,440

 

 

 

8,000

 

8,000

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Profit available for distribution = 8,000 − 960 − 3,600 = Rs 3,440

Total amount received by C = Interest on Capital + Profit Share = 600 + 1,720 = Rs 2,320

Total amount received by D = Interest on Capital + Salary + Profit Share = 360 + 3,600 + 1,720 = Rs 5,680

Answer:

Profit and Loss Account

for the year ended March 31,2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Manager’s Commission

750

Profit before B’s Salary

15,000

(5% of Rs 15,000)

 

(12,500+2,500)

 

Profit transferred to Profit and Loss Appropriation Account

14,250

 

 

 

15,000

 

15,000

 

 

 

 

 

Profit and Loss Appropriation Account

for the year ended March 31,2012

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital A/c:

 

Profit and Loss A/c

14,250

A

3,000

 

 

 

B

1,800

4,800

 

 

B’s Salary

2,500

 

 

Profit transferred to:

 

 

 

A’s Capital A/c

4,170

 

 

 

B’s Capital A/c

2,780

6,950

 

 

 

14,250

 

14,250

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

A

B

Particulars

A

B

Balance c/d

57,170

37,080

Balance b/d

50,000

30,000

 

 

 

Interest on Capital A/c

3,000

1,800

 

 

 

Salary A/c

 

2,500

 

 

 

P/L Appropriation A/c

4,170

2,780

 

57,170

37,080

 

57,170

37,080

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Managers’ Commission

1. Managers’ Commission = 5% on Net Profit (before Salary)

Profit before Salary = Profit after Salary + Salary = 12,500 + 2500 = Rs 15,000

WN 2 Calculation of Interest on Capital

WN 3 Calculation of Profit Share of each Partner

Profit available for distribution = 12,500 − 750 − 3,000 − 1,800

= Rs 6,950

Profit sharing ratio = 3 : 2

Page No 1.70:

Question 38:

Profit and Loss Account

for the year ended March 31,2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Manager’s Commission

750

Profit before B’s Salary

15,000

(5% of Rs 15,000)

 

(12,500+2,500)

 

Profit transferred to Profit and Loss Appropriation Account

14,250

 

 

 

15,000

 

15,000

 

 

 

 

 

Profit and Loss Appropriation Account

for the year ended March 31,2012

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital A/c:

 

Profit and Loss A/c

14,250

A

3,000

 

 

 

B

1,800

4,800

 

 

B’s Salary

2,500

 

 

Profit transferred to:

 

 

 

A’s Capital A/c

4,170

 

 

 

B’s Capital A/c

2,780

6,950

 

 

 

14,250

 

14,250

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

A

B

Particulars

A

B

Balance c/d

57,170

37,080

Balance b/d

50,000

30,000

 

 

 

Interest on Capital A/c

3,000

1,800

 

 

 

Salary A/c

 

2,500

 

 

 

P/L Appropriation A/c

4,170

2,780

 

57,170

37,080

 

57,170

37,080

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Managers’ Commission

1. Managers’ Commission = 5% on Net Profit (before Salary)

Profit before Salary = Profit after Salary + Salary = 12,500 + 2500 = Rs 15,000

WN 2 Calculation of Interest on Capital

WN 3 Calculation of Profit Share of each Partner

Profit available for distribution = 12,500 − 750 − 3,000 − 1,800

= Rs 6,950

Profit sharing ratio = 3 : 2

Answer:

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Sohan Rs

Mohan Rs

Particulars

Sohan Rs

Mohan Rs

Drawings A/c

50,000

30,000

Balance b/d

4,00,000

3,00,000

Interest on Drawings A/c

1,250

750

Interest on Capital A/c

20,000

15,000

 

 

 

P/L Appropriation A/c

60,000

50,000

Balance c/d

4,69,750

3,37,250

Partners’ Salary

36,000

-

 

 

 

Commission

5,000

3,000

 

5,21,000

3,68,000

 

5,21,000

3,68,000

 

 

 

 

 

 

Working Note:

Calculation of Interest on Capital

Page No 1.70:

Question 39:

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Sohan Rs

Mohan Rs

Particulars

Sohan Rs

Mohan Rs

Drawings A/c

50,000

30,000

Balance b/d

4,00,000

3,00,000

Interest on Drawings A/c

1,250

750

Interest on Capital A/c

20,000

15,000

 

 

 

P/L Appropriation A/c

60,000

50,000

Balance c/d

4,69,750

3,37,250

Partners’ Salary

36,000

-

 

 

 

Commission

5,000

3,000

 

5,21,000

3,68,000

 

5,21,000

3,68,000

 

 

 

 

 

 

Working Note:

Calculation of Interest on Capital

Answer:

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital A/c:

 

Profit and Loss A/c (Net Profit)

55,000

Kalu

2,500

 

 

 

Lalu

1,500

4,000

Interest on Drawings A/c:

 

Partners’ Salaries

 

Kalu

87.50

 

Kalu (Rs 500 × 12)

6,000

 

Lalu

60.00

147.50

Lalu (Rs 400 × 12)

4,800

10,800

 

 

 

Profit transferred to:

 

 

 

Kalu’s Capital A/c

24,208.50

 

 

 

Lalu’s Capital A/c

16,139.00

40,347.50

 

 

 

55,147.50

 

55,147.50

 

 

 

 

 

Partners’ Capital Accounts

Cr.

 

 

 

 

Dr.

Particulars

Kalu

Rs

Lalu Rs

Particulars

Kalu

Rs

Lalu Rs

Drawings A/c

3,500

2,400

Balance b/d

50,000

30,000

Interest on Drawings A/c

87.50

60

Interest on Capital A/c

2,500

1,500

 

 

 

Partners’ Salary A/c

6,000

4,800

Balance c/d

79,121

49,979

P/L Appropriation A/c

24,208.50

16,139

 

82,708.50

52,439

 

82,708.50

52,439

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Interest on Drawings

WN 3 Calculation of Profit Share of each Partner

Profit available for Distribution = 55,000 + 147.50 − 4,000 − 10,800

= Rs 40,347.50

Profit sharing ratio = 3 : 2



Page No 1.71:

Question 40:

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital A/c:

 

Profit and Loss A/c (Net Profit)

55,000

Kalu

2,500

 

 

 

Lalu

1,500

4,000

Interest on Drawings A/c:

 

Partners’ Salaries

 

Kalu

87.50

 

Kalu (Rs 500 × 12)

6,000

 

Lalu

60.00

147.50

Lalu (Rs 400 × 12)

4,800

10,800

 

 

 

Profit transferred to:

 

 

 

Kalu’s Capital A/c

24,208.50

 

 

 

Lalu’s Capital A/c

16,139.00

40,347.50

 

 

 

55,147.50

 

55,147.50

 

 

 

 

 

Partners’ Capital Accounts

Cr.

 

 

 

 

Dr.

Particulars

Kalu

Rs

Lalu Rs

Particulars

Kalu

Rs

Lalu Rs

Drawings A/c

3,500

2,400

Balance b/d

50,000

30,000

Interest on Drawings A/c

87.50

60

Interest on Capital A/c

2,500

1,500

 

 

 

Partners’ Salary A/c

6,000

4,800

Balance c/d

79,121

49,979

P/L Appropriation A/c

24,208.50

16,139

 

82,708.50

52,439

 

82,708.50

52,439

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Interest on Drawings

WN 3 Calculation of Profit Share of each Partner

Profit available for Distribution = 55,000 + 147.50 − 4,000 − 10,800

= Rs 40,347.50

Profit sharing ratio = 3 : 2

Answer:

Profit and Loss Adjustment Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Kajal’s loan@ 6% p.a.

1,800

Profit

70,260

Profit transferred to P/L Appropriation A/c

68,460

 

 

 

 

 

 

 

70,260

 

70,260

 

 

 

 

 

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital A/c:

 

Profit and Loss A/c

68,460

Sajal

2,500

 

 

 

Kajal

2,000

4,500

Interest on Drawings A/c:

 

 

 

Sajal

300

 

Reserve

6,450

Kajal

240

540

Profit transferred to:

 

 

 

 Sajal’s Capital A/c

  38,700

 

 

 

Kajal’s Capital A/c

19,350

58,050

 

 

 

69,000

 

69,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Sajal

Kajal

Particulars

Sajal

Kajal

Drawings A/c

10,000

8,000

Balance b/d

50,000

40,000

Interest on Drawings A/c

300

240

Interest on Capital A/c

2,500

2,000

 

 

 

P/L Appropriation A/c

38,700

19,350

Balance c/d

80,900

53,110

 

 

 

 

91,200

61,350

 

91,200

61,350

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Interest on Drawings

WN 3 Calculation of Amount to be transferred to Reserve

Amount for Reserve = 10% of Divisible Profit

Divisible Profit = Profit + Interest on Drawings Interest on Capital

= 68,460 + 540 4,500 = Rs 64,500

WN 4 Calculation of Profit Share of each Partner

Profit available for Distribution = 68,460 + 540 − 4,500 − 6,450

= Rs 58,050

Profit sharing ratio = 2 : 1

Page No 1.71:

Question 41:

Profit and Loss Adjustment Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Kajal’s loan@ 6% p.a.

1,800

Profit

70,260

Profit transferred to P/L Appropriation A/c

68,460

 

 

 

 

 

 

 

70,260

 

70,260

 

 

 

 

 

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital A/c:

 

Profit and Loss A/c

68,460

Sajal

2,500

 

 

 

Kajal

2,000

4,500

Interest on Drawings A/c:

 

 

 

Sajal

300

 

Reserve

6,450

Kajal

240

540

Profit transferred to:

 

 

 

 Sajal’s Capital A/c

  38,700

 

 

 

Kajal’s Capital A/c

19,350

58,050

 

 

 

69,000

 

69,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Sajal

Kajal

Particulars

Sajal

Kajal

Drawings A/c

10,000

8,000

Balance b/d

50,000

40,000

Interest on Drawings A/c

300

240

Interest on Capital A/c

2,500

2,000

 

 

 

P/L Appropriation A/c

38,700

19,350

Balance c/d

80,900

53,110

 

 

 

 

91,200

61,350

 

91,200

61,350

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Interest on Drawings

WN 3 Calculation of Amount to be transferred to Reserve

Amount for Reserve = 10% of Divisible Profit

Divisible Profit = Profit + Interest on Drawings Interest on Capital

= 68,460 + 540 4,500 = Rs 64,500

WN 4 Calculation of Profit Share of each Partner

Profit available for Distribution = 68,460 + 540 − 4,500 − 6,450

= Rs 58,050

Profit sharing ratio = 2 : 1

Answer:

Profit and Loss Appropriation Account

for the year March 31, 2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Salary to B

12,000

Profit and Loss A/c (Net Profit)

35,000

Interest on Capital:

 

Interest on Drawings A/c:

 

A

6,000

 

A

 150

 

B

4,500

10,500

B

210

360

Profit transferred to:

 

 

 

A’s Capital A/c

7,716

 

 

 

B’s Capital A/c

5,144

12,860

 

 

 

35,360

 

35,360

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

Cr.

Particulars

A

B

Particulars

A

B

Drawings A/c

9,000

18,000

Balance b/d

60,000

45,000

Interest on Drawings A/c

150

210

Interest Capital A/c

6,000

4,500

 

 

 

Salary A/c

-

12,000

Balance c/d

64,566

48,434

P/L Appropriation A/c

7,716

5,144

 

73,716

66,644

 

73,716

66,644

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Profit available for Distribution = 35,000 + 360 − 12,000 − 10,500

= Rs 12, 860

Page No 1.71:

Question 42:

Profit and Loss Appropriation Account

for the year March 31, 2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Salary to B

12,000

Profit and Loss A/c (Net Profit)

35,000

Interest on Capital:

 

Interest on Drawings A/c:

 

A

6,000

 

A

 150

 

B

4,500

10,500

B

210

360

Profit transferred to:

 

 

 

A’s Capital A/c

7,716

 

 

 

B’s Capital A/c

5,144

12,860

 

 

 

35,360

 

35,360

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

Cr.

Particulars

A

B

Particulars

A

B

Drawings A/c

9,000

18,000

Balance b/d

60,000

45,000

Interest on Drawings A/c

150

210

Interest Capital A/c

6,000

4,500

 

 

 

Salary A/c

-

12,000

Balance c/d

64,566

48,434

P/L Appropriation A/c

7,716

5,144

 

73,716

66,644

 

73,716

66,644

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Profit available for Distribution = 35,000 + 360 − 12,000 − 10,500

= Rs 12, 860

Answer:

Profit and Loss Adjustment Account

for the year ended March 31, 2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Bimal’s Loan (50,000×6%)

3,000

Profit and Loss (Net Profit)

1,75,000

Profit transferred to P/L Appropriation A/c

1,72,000

 

 

 

 

 

 

 

1,75,000

 

1,75,000

 

 

 

 

 

Profit and Loss Appropriation Account

for the year ended March 31, 2012

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on  Capital:

 

Profit and Loss A/c

1,72,000

Amal

2,500

 

(after Interest on loan)

 

Bimal

2,000

4,500

Interest on Drawings A/c:

 

Profit transferred to:

 

Amal

450

 

Amal’s Capital A/c

1,34,600

 

Bimal

300

750

Bimal’s Capital A/c

   33,650

1,68,250

 

 

 

1,72,750

 

1,72,750

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Amal Rs

Bimal Rs

Particulars

Amal Rs

Bimal Rs

Drawings A/c

15,000

10,000

Balance b/d

50,000

40,000

Interest on Drawings A/c

450

300

Interest on Capital A/c

2,500

2,000

Balance c/d

1,71,650

65,350

P/L Appropriation A/c

1,34,600

33,650

 

1,87,100

75,650

 

1,87,100

75,650

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Interest on Drawings

WN 3 Calculation of Profit Share of each Partner

Profit available for distribution = 1,72,000 + 750 − 4,500 = Rs 1,68,250

Profit sharing ratio = 4 : 1

Page No 1.71:

Question 43:

Profit and Loss Adjustment Account

for the year ended March 31, 2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Bimal’s Loan (50,000×6%)

3,000

Profit and Loss (Net Profit)

1,75,000

Profit transferred to P/L Appropriation A/c

1,72,000

 

 

 

 

 

 

 

1,75,000

 

1,75,000

 

 

 

 

 

Profit and Loss Appropriation Account

for the year ended March 31, 2012

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on  Capital:

 

Profit and Loss A/c

1,72,000

Amal

2,500

 

(after Interest on loan)

 

Bimal

2,000

4,500

Interest on Drawings A/c:

 

Profit transferred to:

 

Amal

450

 

Amal’s Capital A/c

1,34,600

 

Bimal

300

750

Bimal’s Capital A/c

   33,650

1,68,250

 

 

 

1,72,750

 

1,72,750

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Amal Rs

Bimal Rs

Particulars

Amal Rs

Bimal Rs

Drawings A/c

15,000

10,000

Balance b/d

50,000

40,000

Interest on Drawings A/c

450

300

Interest on Capital A/c

2,500

2,000

Balance c/d

1,71,650

65,350

P/L Appropriation A/c

1,34,600

33,650

 

1,87,100

75,650

 

1,87,100

75,650

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Interest on Drawings

WN 3 Calculation of Profit Share of each Partner

Profit available for distribution = 1,72,000 + 750 − 4,500 = Rs 1,68,250

Profit sharing ratio = 4 : 1

Answer:

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Salary to A (Rs 500 × 12)

6,000

Profit and Loss A/c

50,000

Interest on Capital:

 

 

 

A

3,000

 

 

 

B

4,500

7,500

 

 

Profit transferred to :

 

 

 

A’s Capital A/c

18,250

 

 

 

B’s Capital A/c

18,250

36,500

 

 

 

50,000

 

50,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

Cr.

Particulars

A

B

Particulars

A

B

Drawings A/c

15,000

20,000

Balance b/d

50,000

1,00,000

 

 

 

Salary A/c

6,000

-

 

 

 

Interest on Capital A/c

3,000

4,500

Balance c/d

62,250

1,02,750

P/L Appropriation A/c

18,250

18,250

 

77,250

1,22,750

 

77,250

1,22,750

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Profit available for distribution = Rs 50,000 − 6,000 − 7,500 = 36,500

Page No 1.71:

Question 44:

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Salary to A (Rs 500 × 12)

6,000

Profit and Loss A/c

50,000

Interest on Capital:

 

 

 

A

3,000

 

 

 

B

4,500

7,500

 

 

Profit transferred to :

 

 

 

A’s Capital A/c

18,250

 

 

 

B’s Capital A/c

18,250

36,500

 

 

 

50,000

 

50,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

Cr.

Particulars

A

B

Particulars

A

B

Drawings A/c

15,000

20,000

Balance b/d

50,000

1,00,000

 

 

 

Salary A/c

6,000

-

 

 

 

Interest on Capital A/c

3,000

4,500

Balance c/d

62,250

1,02,750

P/L Appropriation A/c

18,250

18,250

 

77,250

1,22,750

 

77,250

1,22,750

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Profit available for distribution = Rs 50,000 − 6,000 − 7,500 = 36,500

Answer:

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Ali

Rs

Bahadur

Rs

Particulars

Ali

Rs

Bahadur

Rs

 

 

 

Balance b/d

25,000

20,000

Balance c/d

25,000

20,000

 

 

 

 

25,000

20,000

 

25,000

20,000

 

 

 

 

 

 

 

Partners’ Current Accounts

Dr.

 

Cr.

Particulars

Ali

Rs

Bahadur

Rs

Particulars

Ali

Rs

Bahadur

Rs

Drawings A/c

3,500

2,500

Interest on Capital A/c

1,250

1,000

 

 

 

Bahadur’s Salary A/c

 

3,000

Balance c/d

19,275

10,725

P/L Appropriation A/c

21,525

9,225

 

22,775

13,225

 

22,775

13,225

 

 

 

 

 

 

Working Notes:

WN 1

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital:

 

Profit and Loss A/c

40,000

Ali

1,250

 

 

 

Bahadur

1,000

2,250

 

 

Reserve

4,000

 

 

Bahadur’s Salary

3,000

 

 

Profit transferred to:

 

 

 

Ali’s Capital A/c

21,525

 

 

 

Bahadur’s Capital A/c

9,225

30,750

 

 

 

40,000

 

40,000

 

 

 

 

WN 2 Calculation of Interest on Capital

WN 3 Calculation of Amount to be transferred to Reserve

WN 4 Calculation of Profit Share of each Partner

Profit available for distribution = 40,000 − 2,250 − 4,000 − 3,000 = Rs 30,750

Page No 1.71:

Question 45:

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Ali

Rs

Bahadur

Rs

Particulars

Ali

Rs

Bahadur

Rs

 

 

 

Balance b/d

25,000

20,000

Balance c/d

25,000

20,000

 

 

 

 

25,000

20,000

 

25,000

20,000

 

 

 

 

 

 

 

Partners’ Current Accounts

Dr.

 

Cr.

Particulars

Ali

Rs

Bahadur

Rs

Particulars

Ali

Rs

Bahadur

Rs

Drawings A/c

3,500

2,500

Interest on Capital A/c

1,250

1,000

 

 

 

Bahadur’s Salary A/c

 

3,000

Balance c/d

19,275

10,725

P/L Appropriation A/c

21,525

9,225

 

22,775

13,225

 

22,775

13,225

 

 

 

 

 

 

Working Notes:

WN 1

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital:

 

Profit and Loss A/c

40,000

Ali

1,250

 

 

 

Bahadur

1,000

2,250

 

 

Reserve

4,000

 

 

Bahadur’s Salary

3,000

 

 

Profit transferred to:

 

 

 

Ali’s Capital A/c

21,525

 

 

 

Bahadur’s Capital A/c

9,225

30,750

 

 

 

40,000

 

40,000

 

 

 

 

WN 2 Calculation of Interest on Capital

WN 3 Calculation of Amount to be transferred to Reserve

WN 4 Calculation of Profit Share of each Partner

Profit available for distribution = 40,000 − 2,250 − 4,000 − 3,000 = Rs 30,750

Answer:

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.   Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital:

 

Profit (after Salary)

21,000

P

2,000

 

 

 

Q

1,500

 

 

 

R

1,500

5,000

 

 

Profit transferred to:

 

 

 

P’s Capital A/c

7,000

 

 

 

Q’s Capital A/c

5,000

 

 

 

R’s Capital A/c

4,000

16,000

 

 

 

21,000

 

21,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

 

 

Cr.

Particulars

P

Q

R

Particulars

P

Q

R

Drawings A/c

10,000

10,000

10,000

Balance b/d

40,000

30,000

30,000

 

 

 

 

Salaries A/c

-

6,000

4,000

 

 

 

 

Interest Capital A/c

2,000

1,500

1,500

Balance c/d

39,000

32,500

29,500

P/L Appropriation A/c

7,000

5,000

4,000

 

49,000

32,500

29,500

 

49,000

42,500

39,500

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Profit available for distribution = 21,000 − 5000 = Rs 16,000

  1. Distribution of first Rs 10,000 (50%, 30% and 20%)

        

  1. Distribution of Reaming Profit i.e. Rs 6,000 (16,000 − 10,000) equally

        

Therefore,



Page No 1.72:

Question 46:

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.   Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital:

 

Profit (after Salary)

21,000

P

2,000

 

 

 

Q

1,500

 

 

 

R

1,500

5,000

 

 

Profit transferred to:

 

 

 

P’s Capital A/c

7,000

 

 

 

Q’s Capital A/c

5,000

 

 

 

R’s Capital A/c

4,000

16,000

 

 

 

21,000

 

21,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

 

 

Cr.

Particulars

P

Q

R

Particulars

P

Q

R

Drawings A/c

10,000

10,000

10,000

Balance b/d

40,000

30,000

30,000

 

 

 

 

Salaries A/c

-

6,000

4,000

 

 

 

 

Interest Capital A/c

2,000

1,500

1,500

Balance c/d

39,000

32,500

29,500

P/L Appropriation A/c

7,000

5,000

4,000

 

49,000

32,500

29,500

 

49,000

42,500

39,500

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Profit available for distribution = 21,000 − 5000 = Rs 16,000

  1. Distribution of first Rs 10,000 (50%, 30% and 20%)

        

  1. Distribution of Reaming Profit i.e. Rs 6,000 (16,000 − 10,000) equally

        

Therefore,

Answer:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital:

 

Profit and Loss A/c

45,000

A

2,500

 

 

 

B

1,500

 

 

 

C

1,000

5,000

 

 

Salary to:

 

 

 

B

5,000

 

 

 

C

5,000

10,000

 

 

Profit transferred to:

 

 

 

A’s Current A/c

15,000

 

 

 

B’s Current A/c

9,000

 

 

 

C’s Current A/c

6,000

30,000

 

 

 

45,000

 

45,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

 

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

 

 

 

 

Balance b/d

50,000

30,000

20,000

Balance c/d

50,000

30,000

20,000

 

 

 

 

 

50,000

30,000

20,000

 

50,000

30,000

20,000

 

 

 

 

 

 

 

 

 

Partners’ Current Accounts

Dr.

 

 

 

 

 

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

Drawings A/c

10,000

7,500

6,000

Balance b/d

4,500

1,500

1,000

 

 

 

 

Interest on Capital A/c

2,500

1,500

1,000

 

 

 

 

Salaries A/c

 

5,000

5,000

Balance c/d

12,000

9,500

7,000

P/L Appropriation A/c

15,000

9,000

6,000

 

22,000

17,000

13,000

 

22,000

17,000

13,000

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Profit available for Distribution = 45,000 − 15,000 = Rs 30,000

Page No 1.72:

Question 47:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital:

 

Profit and Loss A/c

45,000

A

2,500

 

 

 

B

1,500

 

 

 

C

1,000

5,000

 

 

Salary to:

 

 

 

B

5,000

 

 

 

C

5,000

10,000

 

 

Profit transferred to:

 

 

 

A’s Current A/c

15,000

 

 

 

B’s Current A/c

9,000

 

 

 

C’s Current A/c

6,000

30,000

 

 

 

45,000

 

45,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

 

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

 

 

 

 

Balance b/d

50,000

30,000

20,000

Balance c/d

50,000

30,000

20,000

 

 

 

 

 

50,000

30,000

20,000

 

50,000

30,000

20,000

 

 

 

 

 

 

 

 

 

Partners’ Current Accounts

Dr.

 

 

 

 

 

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

Drawings A/c

10,000

7,500

6,000

Balance b/d

4,500

1,500

1,000

 

 

 

 

Interest on Capital A/c

2,500

1,500

1,000

 

 

 

 

Salaries A/c

 

5,000

5,000

Balance c/d

12,000

9,500

7,000

P/L Appropriation A/c

15,000

9,000

6,000

 

22,000

17,000

13,000

 

22,000

17,000

13,000

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit Share of each Partner

Profit available for Distribution = 45,000 − 15,000 = Rs 30,000

Answer:

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on  Capital:

 

Profit and Loss A/c (Net Profit)

50,000

A

3,000

 

 

 

B

1,800

4,800

 

 

B’s Salary (500 × 12)

6,000

 

 

Partner’s  Commission

 

 

 

A

6,000

 

 

 

B

1,581

7,581

 

 

Profit transferred to:

 

 

 

A’s Capital A/c

23,714

 

 

 

B’s Capital A/c

7,905

31,619

 

 

 

50,000

 

50,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

Cr.

Particulars

A

B

Particulars

A

B

Drawings A/c

8,000

6,000

Balance b/d

50,000

30,000

 

 

 

Interest on Capital A/c

3,000

1,800

 

 

 

Commission A/c

6,000

1,581

 

 

 

Salary A/c

 

6,000

Balance c/d

74,714

41,286

P/L Appropriation A/c

23,714

7,905

 

82,714

47,286

 

82,714

47,286

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Commission to Partners

Commission to B = 5% on Profits after all Expense including such Commission

Profits after all expense = 50,000 4,800 6,000 6,000 = Rs 33,200

WN 3 Calculation of Profit Share of each Partner

Profit available for Distribution = 50,000 − 4,800 − 6,000 −7,581

= Rs 31,619

Profit sharing ratio = 3 : 1

Page No 1.72:

Question 48:

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on  Capital:

 

Profit and Loss A/c (Net Profit)

50,000

A

3,000

 

 

 

B

1,800

4,800

 

 

B’s Salary (500 × 12)

6,000

 

 

Partner’s  Commission

 

 

 

A

6,000

 

 

 

B

1,581

7,581

 

 

Profit transferred to:

 

 

 

A’s Capital A/c

23,714

 

 

 

B’s Capital A/c

7,905

31,619

 

 

 

50,000

 

50,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

Cr.

Particulars

A

B

Particulars

A

B

Drawings A/c

8,000

6,000

Balance b/d

50,000

30,000

 

 

 

Interest on Capital A/c

3,000

1,800

 

 

 

Commission A/c

6,000

1,581

 

 

 

Salary A/c

 

6,000

Balance c/d

74,714

41,286

P/L Appropriation A/c

23,714

7,905

 

82,714

47,286

 

82,714

47,286

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Commission to Partners

Commission to B = 5% on Profits after all Expense including such Commission

Profits after all expense = 50,000 4,800 6,000 6,000 = Rs 33,200

WN 3 Calculation of Profit Share of each Partner

Profit available for Distribution = 50,000 − 4,800 − 6,000 −7,581

= Rs 31,619

Profit sharing ratio = 3 : 1

Answer:

Profit and Loss Appropriation Account

for the year ended March 31, 2012

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital:

 

Profit and Loss A/c (Net Profit)

33,360

Amal

2,000

 

 

 

Bimal

1,500

 

 

 

Kamal

1,250

4,750

 

 

Salary to Amal (Rs 250 × 12)

3,000

 

 

Commission to Bimal

985

 

 

General Reserve

2,462

 

 

Profit transferred to:

 

 

 

Amal’s Capital A/c

7,388

 

 

 

Bimal’s Capital A/c

7,388

 

 

 

Kamal’s Capital A/c

7,387

22,163

 

 

 

33,360

 

33,360

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Amal

Rs

Bimal

Rs

Kamal

Rs

Particulars

Amal

Rs

Bimal

Rs

Kamal

Rs

 

 

           

 

Balance b/d

40,000

30,000

25,000

 

 

 

 

Interest on Capital A/c

2,000

1,500

1,250

 

 

 

 

Salary A/c

3,000

-

-

 

 

 

 

Commission

-

985

-

Balance c/d

52,388

39,873

33,637

P/L Appropriation A/c

7,388

7,388

7,387

 

52,388

39,873

33,637

 

52,388

39,873

33,637

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Commission to Bimal

Commission to Bimal = 4% on Net Profits after Commission

Profit after expenses = 33,360 4,750 3,000 = Rs 25,610

WN 3 Calculation of Amount to be transferred to General Reserve

Amount for General Reserve = 10% of Profit

WN 4 Calculation of Profit Share of each Partner

Profit available for Distribution = 33,360 − 4,750 − 3,000− 985 − 2,462

= Rs 22,163

Page No 1.72:

Question 49:

Profit and Loss Appropriation Account

for the year ended March 31, 2012

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Capital:

 

Profit and Loss A/c (Net Profit)

33,360

Amal

2,000

 

 

 

Bimal

1,500

 

 

 

Kamal

1,250

4,750

 

 

Salary to Amal (Rs 250 × 12)

3,000

 

 

Commission to Bimal

985

 

 

General Reserve

2,462

 

 

Profit transferred to:

 

 

 

Amal’s Capital A/c

7,388

 

 

 

Bimal’s Capital A/c

7,388

 

 

 

Kamal’s Capital A/c

7,387

22,163

 

 

 

33,360

 

33,360

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Amal

Rs

Bimal

Rs

Kamal

Rs

Particulars

Amal

Rs

Bimal

Rs

Kamal

Rs

 

 

           

 

Balance b/d

40,000

30,000

25,000

 

 

 

 

Interest on Capital A/c

2,000

1,500

1,250

 

 

 

 

Salary A/c

3,000

-

-

 

 

 

 

Commission

-

985

-

Balance c/d

52,388

39,873

33,637

P/L Appropriation A/c

7,388

7,388

7,387

 

52,388

39,873

33,637

 

52,388

39,873

33,637

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Commission to Bimal

Commission to Bimal = 4% on Net Profits after Commission

Profit after expenses = 33,360 4,750 3,000 = Rs 25,610

WN 3 Calculation of Amount to be transferred to General Reserve

Amount for General Reserve = 10% of Profit

WN 4 Calculation of Profit Share of each Partner

Profit available for Distribution = 33,360 − 4,750 − 3,000− 985 − 2,462

= Rs 22,163

Answer:

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Anshul’s Capital

20,000

Profit and Loss A/c

32,000

Asha’s Salary

12,000

 

 

 

32,000

 

32,000

 

 

 

 

Working Note:

Salary to Asha = Rs 24,000

Total appropriation to be made = 40,000 + 24,000 = Rs 64,000

Profit earned during the year = 32,000

Here, profit available for distribution (i.e. Rs 32,000) is less than the sum total of Interest on Capital and Salary (i.e. Rs 64,000).

Therefore, profit will be distributed in the ratio of Interest on Capital and Salary.

Page No 1.72:

Question 50:

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Interest on Anshul’s Capital

20,000

Profit and Loss A/c

32,000

Asha’s Salary

12,000

 

 

 

32,000

 

32,000

 

 

 

 

Working Note:

Salary to Asha = Rs 24,000

Total appropriation to be made = 40,000 + 24,000 = Rs 64,000

Profit earned during the year = 32,000

Here, profit available for distribution (i.e. Rs 32,000) is less than the sum total of Interest on Capital and Salary (i.e. Rs 64,000).

Therefore, profit will be distributed in the ratio of Interest on Capital and Salary.

Answer:

Profit and Loss Appropriation Account

for the year ended March 31, 2010

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

General Reserve

20,000

Profit and Loss A/c

75,500

Interest on Capital A/c:

 

Interest on Drawings A/c:

 

Ripa

4,000

 

Ripa

455

 

Rini

3,200

 

Rini

390

 

Rima

2,800

10,000

Rima

325

1,170

Salary to:

 

 

 

Rini

3,000

 

 

 

Rima

4,500

7,500

 

 

Commission to Ripa

3,561

 

 

Profit transferred to:

 

 

 

Ripa’s Capital A/c

11,870

 

 

 

Rini’s Capital A/c

11,870

 

 

 

Rima’s Capital A/c

11,869

35,609

 

 

 

76,670

 

76,670

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Ripa

Rs

Rini

Rs

Rima

Rs

Particulars

Ripa

Rs

Rini

Rs

Rima

Rs

Drawings A/c

8,400

7,200

6,000

Balance b/d

50,000

40,000

35,000

Interest on Drawings

455

390

325

Interest on Capital A/c

4,000

3,200

2,800

 

 

 

 

Salary A/c

-

3,000

4,500

Balance c/d

60,576

50,480

47,844

Commission A/c

3,561

-

-

 

 

 

 

P/L Appropriation A/c

11,870

11,870

11,869

 

69,431

58,070

54,169

 

69,431

58,070

54,169

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Interest on Drawings

WN 3 Calculation of Commission to Ripa

Commission to Ripa = 10% on Net Distributable Profit after charging such Commission

Net Distributable Profit = 75,500 + 1,170 − 20,000 − 10,000 − 7,500

= Rs 39,170

WN 4 Calculation of Profit Share of each Partner

Profit available for Distribution = 39,170 − 3561 = Rs 35,609



Page No 1.73:

Question 51:

Profit and Loss Appropriation Account

for the year ended March 31, 2010

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

General Reserve

20,000

Profit and Loss A/c

75,500

Interest on Capital A/c:

 

Interest on Drawings A/c:

 

Ripa

4,000

 

Ripa

455

 

Rini

3,200

 

Rini

390

 

Rima

2,800

10,000

Rima

325

1,170

Salary to:

 

 

 

Rini

3,000

 

 

 

Rima

4,500

7,500

 

 

Commission to Ripa

3,561

 

 

Profit transferred to:

 

 

 

Ripa’s Capital A/c

11,870

 

 

 

Rini’s Capital A/c

11,870

 

 

 

Rima’s Capital A/c

11,869

35,609

 

 

 

76,670

 

76,670

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Ripa

Rs

Rini

Rs

Rima

Rs

Particulars

Ripa

Rs

Rini

Rs

Rima

Rs

Drawings A/c

8,400

7,200

6,000

Balance b/d

50,000

40,000

35,000

Interest on Drawings

455

390

325

Interest on Capital A/c

4,000

3,200

2,800

 

 

 

 

Salary A/c

-

3,000

4,500

Balance c/d

60,576

50,480

47,844

Commission A/c

3,561

-

-

 

 

 

 

P/L Appropriation A/c

11,870

11,870

11,869

 

69,431

58,070

54,169

 

69,431

58,070

54,169

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Interest on Drawings

WN 3 Calculation of Commission to Ripa

Commission to Ripa = 10% on Net Distributable Profit after charging such Commission

Net Distributable Profit = 75,500 + 1,170 − 20,000 − 10,000 − 7,500

= Rs 39,170

WN 4 Calculation of Profit Share of each Partner

Profit available for Distribution = 39,170 − 3561 = Rs 35,609

Answer:

Profit and Loss Appropriation Account

for the year ended March 31, 2012

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Donation to Red Cross Society (12,00,000×5%)

60,000

Profit and Loss A/c (Net Profit)

12,00,000

Donation to Prime Minister Relief Fund (12,00,000×10%)

1,20,000

 

 

Profit transferred to:

 

 

 

 

Sita

3,40,000

 

 

 

Geeta

3,40,000

 

 

 

Neha

3,40,000

10,20,000

 

 

 

 

12,00,000

 

12,00,000

 

 


The four values that should be kept in mind by the three partners while preparing Partnership Deed are 

  1. Equality and Equity;
  2. Social Welfare;
  3. Mutual Trust and Honesty
  4. Integration of individual efforts to achieve common goals

Page No 1.73:

Question 52:

Profit and Loss Appropriation Account

for the year ended March 31, 2012

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Donation to Red Cross Society (12,00,000×5%)

60,000

Profit and Loss A/c (Net Profit)

12,00,000

Donation to Prime Minister Relief Fund (12,00,000×10%)

1,20,000

 

 

Profit transferred to:

 

 

 

 

Sita

3,40,000

 

 

 

Geeta

3,40,000

 

 

 

Neha

3,40,000

10,20,000

 

 

 

 

12,00,000

 

12,00,000

 

 


The four values that should be kept in mind by the three partners while preparing Partnership Deed are 

  1. Equality and Equity;
  2. Social Welfare;
  3. Mutual Trust and Honesty
  4. Integration of individual efforts to achieve common goals

Answer:

Journal

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

Nisha’s Capital A/c

Dr.

 

55,000

 

To Reya’s Capital A/c

 

 

55,000

(Adjustment of profit made)

 

 

 

 

 

 

 

Working Note:

Total Profits for Last 3 years = 1,40,000 + 84,000 + 1,06,000 = Rs 3,30,000

Statement Showing Adjustment

Particulars

Reya

Mona

Nisha

Total

Right Distribution of Profit (3 : 2 :1)

1,65,000

1,10,000

55,000

3,30,000

Wrong Distribution of Profit (1: 1 : 1)

(1,10,000)

(1,10,000)

(1,10,000)

(3,30,000)

Net Effect

55,000

NIL

(55,000)

NIL

 

 

 

 

 

 

Page No 1.73:

Question 53:

Journal

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

Nisha’s Capital A/c

Dr.

 

55,000

 

To Reya’s Capital A/c

 

 

55,000

(Adjustment of profit made)

 

 

 

 

 

 

 

Working Note:

Total Profits for Last 3 years = 1,40,000 + 84,000 + 1,06,000 = Rs 3,30,000

Statement Showing Adjustment

Particulars

Reya

Mona

Nisha

Total

Right Distribution of Profit (3 : 2 :1)

1,65,000

1,10,000

55,000

3,30,000

Wrong Distribution of Profit (1: 1 : 1)

(1,10,000)

(1,10,000)

(1,10,000)

(3,30,000)

Net Effect

55,000

NIL

(55,000)

NIL

 

 

 

 

 

 

Answer:

Journal

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

Anu’s  Capital A/c

Dr.

 

1,000

 

 

To Pankaj’s Capital A/c

 

 

1,000

 

(Adjustment of omission of Interest on Capital)

 

 

 

 

 

 

 

 

Working Note:

Statement Showing Adjustment

Particulars

Pankaj

Anu

Total

Interest on Capital to be credited

3,000

1,000

4,000

Profit wrongly distributed equally to be debited

(2,000)

(2,000)

(4,000)

Net Effect

1,000

(Cr.)

1,000

(Dr.)

NIL

 

 

 

 

 

Page No 1.73:

Question 54:

Journal

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

Anu’s  Capital A/c

Dr.

 

1,000

 

 

To Pankaj’s Capital A/c

 

 

1,000

 

(Adjustment of omission of Interest on Capital)

 

 

 

 

 

 

 

 

Working Note:

Statement Showing Adjustment

Particulars

Pankaj

Anu

Total

Interest on Capital to be credited

3,000

1,000

4,000

Profit wrongly distributed equally to be debited

(2,000)

(2,000)

(4,000)

Net Effect

1,000

(Cr.)

1,000

(Dr.)

NIL

 

 

 

 

 

Answer:

Journal

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

Ram’s Capital A/c

Dr.

 

100

 

 

To Mohan’s Capital A/c

 

 

100

 

(Interest on Capital was omitted, now adjusted)

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

Particulars

Ram

Mohan

Total

Interest on Capital to be credited

200

400

600

For sharing above Loss (1:1)

(300)

(300)

(600)

Net Effect

(100)

(100)

Nil

(Dr.)

(Cr.)

 

 

 

Page No 1.73:

Question 55:

Journal

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

Ram’s Capital A/c

Dr.

 

100

 

 

To Mohan’s Capital A/c

 

 

100

 

(Interest on Capital was omitted, now adjusted)

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

Particulars

Ram

Mohan

Total

Interest on Capital to be credited

200

400

600

For sharing above Loss (1:1)

(300)

(300)

(600)

Net Effect

(100)

(100)

Nil

(Dr.)

(Cr.)

 

 

 

Answer:

Journal

Date

Particulars

L. F.

Debit Amount

Rs

Credit Amount

Rs

 

A’s Capital A/c

Dr.

 

1,210

 

 

To B’s Capital A/c

 

 

1,210

 

(Amount of interest on Capital and interest

on drawings adjusted)

 

 

 

 

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

A

B

Particulars

A

B

B’s Capital A/c

1,210

 

Balance b/d

4,00,000

3,00,000

 

 

 

A’s Capital A/c

-

1,210

Balance c/d

3,98,790

3,01,210

 

 

 

 

4,00,000

3,01,210

 

4,00,000

3,01,210

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Capital as on April 01, 2014 (Opening Capital)

Particulars

A

B

Total

Capital as on March 31, 2015 (Closing)

4,00,000

3,00,000

7,00,000

Add: Drawings

48,000

36,000

84,000

Less: Profit (3:2)

(1,20,000)

(80,000)

(2,00,000)

Capital as on April 01, 2014 (Opening)

3,28,000

2,56,000

5,84,000

 

 

 

 

WN 2 Calculation on Interest on Capital

WN 3 Calculation of Interest on Drawings

WN 4

Statement Showing Adjustment

Particulars

A

B

Total

Interest on Capital (to be credited)

16,400

12,800

29,200

Less: Interest on Drawings

(900)

(450)

(1,350)

Right distribution of Rs 27,850

15,500

12,350

27,850

Less: Wrong Distribution of Rs 27,850 (3:2)

(16,710)

(11,140)

(27,850)

Net Effect

(1,210)

1,210

NIL

 

 

 

 

 



Page No 1.74:

Question 56:

Journal

Date

Particulars

L. F.

Debit Amount

Rs

Credit Amount

Rs

 

A’s Capital A/c

Dr.

 

1,210

 

 

To B’s Capital A/c

 

 

1,210

 

(Amount of interest on Capital and interest

on drawings adjusted)

 

 

 

 

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

A

B

Particulars

A

B

B’s Capital A/c

1,210

 

Balance b/d

4,00,000

3,00,000

 

 

 

A’s Capital A/c

-

1,210

Balance c/d

3,98,790

3,01,210

 

 

 

 

4,00,000

3,01,210

 

4,00,000

3,01,210

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Capital as on April 01, 2014 (Opening Capital)

Particulars

A

B

Total

Capital as on March 31, 2015 (Closing)

4,00,000

3,00,000

7,00,000

Add: Drawings

48,000

36,000

84,000

Less: Profit (3:2)

(1,20,000)

(80,000)

(2,00,000)

Capital as on April 01, 2014 (Opening)

3,28,000

2,56,000

5,84,000

 

 

 

 

WN 2 Calculation on Interest on Capital

WN 3 Calculation of Interest on Drawings

WN 4

Statement Showing Adjustment

Particulars

A

B

Total

Interest on Capital (to be credited)

16,400

12,800

29,200

Less: Interest on Drawings

(900)

(450)

(1,350)

Right distribution of Rs 27,850

15,500

12,350

27,850

Less: Wrong Distribution of Rs 27,850 (3:2)

(16,710)

(11,140)

(27,850)

Net Effect

(1,210)

1,210

NIL

 

 

 

 

 

Answer:

Journal

Date

Particulars

L. F.

Debit Amount

Rs

Credit Amount

Rs

 

Q’s Capital A/c

Dr.

 

4,000

 

 

R’s Capital A/c

Dr.

 

1,000

 

 

To P’s Capital A/c

 

 

5,000

 

(Interest on Capital was omitted, now adjusted)

 

 

 

 

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

P

Q

R

Particulars

P

Q

R

P’s Capital

 

4,000

1,000

Balance b/d

1,50,000

1,80,000

2,10,000

 

 

 

 

Q’s Capital

4,000

 

 

Balance c/d

1,55,000

1,76,000

2,09,000

R’s Capital

1,000

 

 

 

1,55,000

1,80,000

2,10,000

 

1,55,000

1,80,000

2,10,000

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Capital as on April 01, 2013 (Opening Capital)

Particulars

P

Q

R

Total

Capital as on March 31, 2014 (Closing)

1,50,000

1,80,000

2,10,000

5,40,000

Add: Drawings

20,000

20,000

20,000

60,000

Less: Profit (1:2:2)

(12,000)

(24,000)

(24,000)

(60,000)

Capital as April 01, 2013 (Opening)

1,58,000

1,76,000

2,06,000

5,40,000

 

 

 

 

 

WN 2 Calculation of Interest on Capital

WN 4

Statement Showing Adjustment

Particulars

P

Q

R

Total

Interest on Capital to be credited

15,800

17,600

20,600

54,000

For sharing above Loss (1 : 2 : 2)

(10,800)

(21,600)

(21,600)

(54,000)

Net Effect

5,000

(Cr.)

(4,000)

(Dr.)

(1,000)

(Dr.)

(NIL)

 

 

 

 

 

 

Page No 1.74:

Question 57:

Journal

Date

Particulars

L. F.

Debit Amount

Rs

Credit Amount

Rs

 

Q’s Capital A/c

Dr.

 

4,000

 

 

R’s Capital A/c

Dr.

 

1,000

 

 

To P’s Capital A/c

 

 

5,000

 

(Interest on Capital was omitted, now adjusted)

 

 

 

 

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

P

Q

R

Particulars

P

Q

R

P’s Capital

 

4,000

1,000

Balance b/d

1,50,000

1,80,000

2,10,000

 

 

 

 

Q’s Capital

4,000

 

 

Balance c/d

1,55,000

1,76,000

2,09,000

R’s Capital

1,000

 

 

 

1,55,000

1,80,000

2,10,000

 

1,55,000

1,80,000

2,10,000

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Capital as on April 01, 2013 (Opening Capital)

Particulars

P

Q

R

Total

Capital as on March 31, 2014 (Closing)

1,50,000

1,80,000

2,10,000

5,40,000

Add: Drawings

20,000

20,000

20,000

60,000

Less: Profit (1:2:2)

(12,000)

(24,000)

(24,000)

(60,000)

Capital as April 01, 2013 (Opening)

1,58,000

1,76,000

2,06,000

5,40,000

 

 

 

 

 

WN 2 Calculation of Interest on Capital

WN 4

Statement Showing Adjustment

Particulars

P

Q

R

Total

Interest on Capital to be credited

15,800

17,600

20,600

54,000

For sharing above Loss (1 : 2 : 2)

(10,800)

(21,600)

(21,600)

(54,000)

Net Effect

5,000

(Cr.)

(4,000)

(Dr.)

(1,000)

(Dr.)

(NIL)

 

 

 

 

 

 

Answer:

Journal

Particulars

L. F.

Debit Amount

Rs

Credit Amount

Rs

Anil’s Capital A/c

Dr.

 

550

 

To Mohan’s Capital A/c

 

 

550

(Interest on capital and interest on drawings was omitted, now adjusted)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Capital at the beginning

Particulars

Mohan

Vijay

Anil

Total

Capital at the end

30,000

25,000

20,000

75,000

Add: Drawings

5,000

4,000

3,000

12,000

Less: Profit (1:1:1)

(8,000)

(8,000)

(8,000)

(24,000)

Capital in the beginning

27,000

21,000

15,000

63,000

 

 

 

 

 

WN 2 Calculation of Interest on Capital

WN 3

Statement Showing Adjustment

 

Mohan

Vijay

Anil

Total

Interest on Capital to be credited

2,700

2,100

1,500

6,300

Less: Interest on Drawings

(250)

(200)

(150)

(600)

Right Distribution of Rs 5,700

2,450

1,900

1,350

5,700

Wrong Distribution of Rs 5,700 (1:1:1)

(1,900)

(1,900)

(1,900)

(5,700)

Net Effect

550

Nil

(550)

NIL

 

 

 

 

 

WN 4 Calculation of Final Profit Share of Partners

Total Corrected Profit Available for Distribution = Profit - Interest on Capital + Interest on Drawings = 24,000 - 6,300 + 600 = Rs 18,300

Page No 1.74:

Question 58:

Journal

Particulars

L. F.

Debit Amount

Rs

Credit Amount

Rs

Anil’s Capital A/c

Dr.

 

550

 

To Mohan’s Capital A/c

 

 

550

(Interest on capital and interest on drawings was omitted, now adjusted)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Capital at the beginning

Particulars

Mohan

Vijay

Anil

Total

Capital at the end

30,000

25,000

20,000

75,000

Add: Drawings

5,000

4,000

3,000

12,000

Less: Profit (1:1:1)

(8,000)

(8,000)

(8,000)

(24,000)

Capital in the beginning

27,000

21,000

15,000

63,000

 

 

 

 

 

WN 2 Calculation of Interest on Capital

WN 3

Statement Showing Adjustment

 

Mohan

Vijay

Anil

Total

Interest on Capital to be credited

2,700

2,100

1,500

6,300

Less: Interest on Drawings

(250)

(200)

(150)

(600)

Right Distribution of Rs 5,700

2,450

1,900

1,350

5,700

Wrong Distribution of Rs 5,700 (1:1:1)

(1,900)

(1,900)

(1,900)

(5,700)

Net Effect

550

Nil

(550)

NIL

 

 

 

 

 

WN 4 Calculation of Final Profit Share of Partners

Total Corrected Profit Available for Distribution = Profit - Interest on Capital + Interest on Drawings = 24,000 - 6,300 + 600 = Rs 18,300

Answer:

Journal

Particulars

L. F.

Debit Amount

Rs

Credit Amount

Rs

Ram’s Capital A/c

Dr.

 

300

 

To Sohan’s Capital A/c

 

 

300

(Interest on Capital was wrongly credited,

now adjusted)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital at 6% p.a.

WN 2 Calculation of Interest on Capital at 5% p.a.

WN 3

Statement Showing Adjustment

Particulars

Ram

Mohan

Sohan

Total

Interest on Capital wrongly credited at 6% p.a. reversed

(7,200)

(5,400)

(3,600)

(16,200)

Interest on Capital credited at 5% p.a.

6,000

4,500

3,000

13,500

Wrong Distribution

(1,200)

(900)

(600)

(2,700)

Right Distribution of Rs 2,700 (1:1:1)

900

900

900

(2,700)

Net Effect

(300)

NIL

300

NIL

 

 

 

 

 

 

Page No 1.74:

Question 59:

Journal

Particulars

L. F.

Debit Amount

Rs

Credit Amount

Rs

Ram’s Capital A/c

Dr.

 

300

 

To Sohan’s Capital A/c

 

 

300

(Interest on Capital was wrongly credited,

now adjusted)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital at 6% p.a.

WN 2 Calculation of Interest on Capital at 5% p.a.

WN 3

Statement Showing Adjustment

Particulars

Ram

Mohan

Sohan

Total

Interest on Capital wrongly credited at 6% p.a. reversed

(7,200)

(5,400)

(3,600)

(16,200)

Interest on Capital credited at 5% p.a.

6,000

4,500

3,000

13,500

Wrong Distribution

(1,200)

(900)

(600)

(2,700)

Right Distribution of Rs 2,700 (1:1:1)

900

900

900

(2,700)

Net Effect

(300)

NIL

300

NIL

 

 

 

 

 

 

Answer:

Journal

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

Shyam’s Current A/c

Dr.

 

200

 

Mohan’s Current A/c

Dr.

 

400

 

To Ram’s Current A/c

 

 

600

(Interest on Capital adjusted)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital 10% p.a.

WN 2 Calculation of Interest on Capital 9% p.a.

WN 3

Statement Showing Adjustment

Particulars

Ram

Shyam

Mohan

Total

Interest on Capital credited at 10% p.a.

30,000

10,000

20,000

60,000

Interest on Capital wrongly credited at 9% p.a. reversed

(27,000)

(9,000)

(18,000)

(54,000)

Right distribution

3,000

1,000

2,000

6,000

Wrong distribution of Rs 6,000 (2:1:2)

(2,400)

(1,200)

(2,400)

(6,000)

Net Effect

600

(200)

(400)

NIL

 

 

 

 

 

 

Page No 1.74:

Question 60:

Journal

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

Shyam’s Current A/c

Dr.

 

200

 

Mohan’s Current A/c

Dr.

 

400

 

To Ram’s Current A/c

 

 

600

(Interest on Capital adjusted)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital 10% p.a.

WN 2 Calculation of Interest on Capital 9% p.a.

WN 3

Statement Showing Adjustment

Particulars

Ram

Shyam

Mohan

Total

Interest on Capital credited at 10% p.a.

30,000

10,000

20,000

60,000

Interest on Capital wrongly credited at 9% p.a. reversed

(27,000)

(9,000)

(18,000)

(54,000)

Right distribution

3,000

1,000

2,000

6,000

Wrong distribution of Rs 6,000 (2:1:2)

(2,400)

(1,200)

(2,400)

(6,000)

Net Effect

600

(200)

(400)

NIL

 

 

 

 

 

 

Answer:

Journal

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

A’s Capital A/c

Dr.

 

1,500

 

B’s Capital A/c

Dr.

 

8,250

 

To C’s Capital A/c

 

 

9,750

(Adjustment of profit made)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit available for Distribution

Profit available for distribution = Net Profit − Interest on Capital − Salary to C

= 45000 − 5000 − 18000 = Rs 22,000

WN 3 Right Distribution of Rs 45,000

Particulars

A

B

C

Total

Interest on Capital to be credited

2,500

1,250

1,250

5,000

Salary to be credited

 

 

1,8000

18,000

Distribution of Profit Rs 22,000

11,000

5,500

5,500

22,000

Total Profit

13,500

6,750

24,750

45,000

 

 

 

 

 

WN 4 Wrong Distribution of Rs 45,000 in equal Ratio

WN 5

Statement Showing Adjustment

Particulars

A

B

C

Total

Right Distribution of Profit (WN 3)

13,500

6,750

24,750

45,000

Wrong Distribution of Profit (WN 4)

(15,000)

(15,000)

(15,000)

(45,000)

Net Effect

(1,500)

(8,250)

9,750

NIL

 

 

 

 

 

 

Page No 1.74:

Question 61:

Journal

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

A’s Capital A/c

Dr.

 

1,500

 

B’s Capital A/c

Dr.

 

8,250

 

To C’s Capital A/c

 

 

9,750

(Adjustment of profit made)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit available for Distribution

Profit available for distribution = Net Profit − Interest on Capital − Salary to C

= 45000 − 5000 − 18000 = Rs 22,000

WN 3 Right Distribution of Rs 45,000

Particulars

A

B

C

Total

Interest on Capital to be credited

2,500

1,250

1,250

5,000

Salary to be credited

 

 

1,8000

18,000

Distribution of Profit Rs 22,000

11,000

5,500

5,500

22,000

Total Profit

13,500

6,750

24,750

45,000

 

 

 

 

 

WN 4 Wrong Distribution of Rs 45,000 in equal Ratio

WN 5

Statement Showing Adjustment

Particulars

A

B

C

Total

Right Distribution of Profit (WN 3)

13,500

6,750

24,750

45,000

Wrong Distribution of Profit (WN 4)

(15,000)

(15,000)

(15,000)

(45,000)

Net Effect

(1,500)

(8,250)

9,750

NIL

 

 

 

 

 

 

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit 

Amount

Rs

B’s Current A/c

Dr.

 

5,600

 

To A’s Current A/c

 

 

5,600

(Adjustment of Profit made as per new agreement)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit available for Distribution

Profit available for Distribution (after interest on capital) = 60,000 − 9,000 = Rs 51,000

Profit sharing ratio = 3 : 2

WN 3

Statement Showing Adjustment

Particulars

A

B

Total

Interest on Capital to be credited

5,000

4,000

9,000

Profit after Interest on Capital (3:2)

30,600

20,400

51,000

Right Distribution of Profit (to be credited)

35,600

24,400

60,000

 

 

 

 

Wrong Distribution of Profit (to be debited) (1 : 1)

(30,000)

(30,000)

(60,000)

Net Effect

5,600

(5,600)

NIL

 

 

 

 

 

Page No 1.74:

Question 62:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit 

Amount

Rs

B’s Current A/c

Dr.

 

5,600

 

To A’s Current A/c

 

 

5,600

(Adjustment of Profit made as per new agreement)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculation of Profit available for Distribution

Profit available for Distribution (after interest on capital) = 60,000 − 9,000 = Rs 51,000

Profit sharing ratio = 3 : 2

WN 3

Statement Showing Adjustment

Particulars

A

B

Total

Interest on Capital to be credited

5,000

4,000

9,000

Profit after Interest on Capital (3:2)

30,600

20,400

51,000

Right Distribution of Profit (to be credited)

35,600

24,400

60,000

 

 

 

 

Wrong Distribution of Profit (to be debited) (1 : 1)

(30,000)

(30,000)

(60,000)

Net Effect

5,600

(5,600)

NIL

 

 

 

 

 

Answer:

Journal

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

A’s Current A/c

Dr.

 

286

 

To B’s Current A/c

 

 

82

To C’s Current A/c

 

 

204

(Interest on Capital wrong credited, now adjusted)

 

 

 

 

 

 

 

Working Notes:

Year 2010–11

A

B

C

=

Total

Wrong Distribution

 

 

 

 

 

Interest on Capital (to be debited)

(350)

(200)

(110)

=

(660)

For sharing above profit (1:1:1)

220

220

220

=

660

 

(130)

20

110

=

NIL

 

 

 

 

 

 

 

Year 2011–12

A

B

C

=

Total

Wrong Distribution

 

 

 

 

 

Interest on Capital (to be debited)

(360)

(210)

(110)

=

(680)

For sharing above profit (3:4:3)

204

272

204

=

680

 

(156)

62

94

=

NIL

 

 

 

 

 

 

 

Adjustment of Profit

A

B

C

For 2010–2011

(130)

20

110

For 2011–2012

(156)

62

94

Net Effect

(286)

82

204

 

 

 

 

 



Page No 1.75:

Question 63:

Journal

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

A’s Current A/c

Dr.

 

286

 

To B’s Current A/c

 

 

82

To C’s Current A/c

 

 

204

(Interest on Capital wrong credited, now adjusted)

 

 

 

 

 

 

 

Working Notes:

Year 2010–11

A

B

C

=

Total

Wrong Distribution

 

 

 

 

 

Interest on Capital (to be debited)

(350)

(200)

(110)

=

(660)

For sharing above profit (1:1:1)

220

220

220

=

660

 

(130)

20

110

=

NIL

 

 

 

 

 

 

 

Year 2011–12

A

B

C

=

Total

Wrong Distribution

 

 

 

 

 

Interest on Capital (to be debited)

(360)

(210)

(110)

=

(680)

For sharing above profit (3:4:3)

204

272

204

=

680

 

(156)

62

94

=

NIL

 

 

 

 

 

 

 

Adjustment of Profit

A

B

C

For 2010–2011

(130)

20

110

For 2011–2012

(156)

62

94

Net Effect

(286)

82

204

 

 

 

 

 

Answer:

Journal

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

P’s Current A/c

Dr.

 

300

 

 

To Q’s Capital A/c

 

 

8

 

To R’s Capital A/c

 

 

292

 

(Interest on Capital was omitted, now adjusted)

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Capital at the beginning (as on April 01, 2013)

Particulars

P

Q

R

Capital as on March 31, 2014 (Closing)

40,000

30,000

20,000

Add: Drawings

10,000

7,500

4,500

Less: Profit Rs 60,000 (3:2:1)

(30,000)

(20,000)

(10,000)

Capital as on April 01, 2013 (Opening)

20,000

17,500

14,500

 

 

 

 

WN 2 Calculation of Interest on Capital

WN 3

Statement Showing Adjustment

Particulars

P

Q

R

Total

Interest on Capital (to be credited)

1,000

875

725

2,600

For sharing above Loss (3:2:1)

(1,300)

(867)

(433)

(2,600)

Net Effect

(300)

8

292

NIL

 

 

 

 

 

 

Page No 1.75:

Question 64:

Journal

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

P’s Current A/c

Dr.

 

300

 

 

To Q’s Capital A/c

 

 

8

 

To R’s Capital A/c

 

 

292

 

(Interest on Capital was omitted, now adjusted)

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Capital at the beginning (as on April 01, 2013)

Particulars

P

Q

R

Capital as on March 31, 2014 (Closing)

40,000

30,000

20,000

Add: Drawings

10,000

7,500

4,500

Less: Profit Rs 60,000 (3:2:1)

(30,000)

(20,000)

(10,000)

Capital as on April 01, 2013 (Opening)

20,000

17,500

14,500

 

 

 

 

WN 2 Calculation of Interest on Capital

WN 3

Statement Showing Adjustment

Particulars

P

Q

R

Total

Interest on Capital (to be credited)

1,000

875

725

2,600

For sharing above Loss (3:2:1)

(1,300)

(867)

(433)

(2,600)

Net Effect

(300)

8

292

NIL

 

 

 

 

 

 

Answer:

Journal

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

Shiv’s Current A/c

Dr.

 

6,636

 

To Shankar’s Current A/c

 

 

6,636

(Interest on Capital and Interest on drawings was

omitted, now adjusted)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculating of Interest on Drawings

WN 3

Statement Showing Adjustment

Particulars

Shiv

Shankar

Total

Interest on Capital (to be credited)

20,400

25,200

45,600

Interest Drawings (to be debited)

(1,620)

(1,620)

(3,240)

Right Distribution

18,780

23,580

42,360

Wrong Distribution (3 : 2)

(25,416)

(16,944)

(42,360)

Net Effect

 (6,636)

6,636

NIL

 

 

 

 

 

Page No 1.75:

Question 65:

Journal

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

Shiv’s Current A/c

Dr.

 

6,636

 

To Shankar’s Current A/c

 

 

6,636

(Interest on Capital and Interest on drawings was

omitted, now adjusted)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Calculating of Interest on Drawings

WN 3

Statement Showing Adjustment

Particulars

Shiv

Shankar

Total

Interest on Capital (to be credited)

20,400

25,200

45,600

Interest Drawings (to be debited)

(1,620)

(1,620)

(3,240)

Right Distribution

18,780

23,580

42,360

Wrong Distribution (3 : 2)

(25,416)

(16,944)

(42,360)

Net Effect

 (6,636)

6,636

NIL

 

 

 

 

 

Answer:

Journal

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

A’s Current A/c

Dr.

 

3,675

 

To B’s Current A/c

 

 

2,895

To C’s Current A/c

 

 

780

(Adjustment of profit made)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Salary to B = Rs 500 × 12 = Rs 6,000

WN 3 Calculation of Commission to C

Commission to C = 5% on profit after interest on capital but before salary

Profit after Interest on Capital but before Salary = 30,000 3,000 = Rs 27,000

WN 4 Calculation of Profit Share of each Partner

Profit available for Distribution = 30,000 − 3,000 − 6,000 − 1,350 = Rs 19,650

WN 5

Statement Showing Adjustment

Particulars

A

B

C

Total

Interest on Capital (to be credited)

1,500

1,000

   500

3,000

Salary/ Commission (to be credited)

-

6,000

1,350

7,350

Profit (to be credited)

9,825

5,895

3,930

19,650

Right Distribution

11,325

12,895

5,780

30,000

Wrong Distribution of Rs 30,000 (3:2:1)

(15,000)

(10,000)

(5,000)

(30,000)

Net Effect

(3,675)

2,895

  780

NIL

 

 

 

 

 

 

Page No 1.75:

Question 66:

Journal

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

A’s Current A/c

Dr.

 

3,675

 

To B’s Current A/c

 

 

2,895

To C’s Current A/c

 

 

780

(Adjustment of profit made)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

WN 2 Salary to B = Rs 500 × 12 = Rs 6,000

WN 3 Calculation of Commission to C

Commission to C = 5% on profit after interest on capital but before salary

Profit after Interest on Capital but before Salary = 30,000 3,000 = Rs 27,000

WN 4 Calculation of Profit Share of each Partner

Profit available for Distribution = 30,000 − 3,000 − 6,000 − 1,350 = Rs 19,650

WN 5

Statement Showing Adjustment

Particulars

A

B

C

Total

Interest on Capital (to be credited)

1,500

1,000

   500

3,000

Salary/ Commission (to be credited)

-

6,000

1,350

7,350

Profit (to be credited)

9,825

5,895

3,930

19,650

Right Distribution

11,325

12,895

5,780

30,000

Wrong Distribution of Rs 30,000 (3:2:1)

(15,000)

(10,000)

(5,000)

(30,000)

Net Effect

(3,675)

2,895

  780

NIL

 

 

 

 

 

 

Answer:

Journal

 

Date

Particulars

L.F.

Debit

Amount

Rs

Credit Amount

Rs

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

2,520

 

 

C’s Capital A/c

 Dr.

 

2,740

 

 

To B’s Capital A/c

 

 

 

5,260

 

(Adjustment of profit made)

 

 

 

 


Working Notes
WN 1) Calculation of Interest on Capital

WN 2) Interest on drawing is given to be
For A – Rs 350
For B – Rs 250
For C – Rs 150 

WN 3) Salaries
To A – Rs 5,000, and 
To B – Rs 7,500

WN 4) Commission to A Rs 3,000

WN 5) Calculation of Profit share of each Partner
Profit available for distribution = 30,000 – 7,200 + 750 – 12,500 – 3,000 = Rs 8,050

WN 6)

Statement Showing Adjustment

Particulars

A

B

C

Total

Interest on Capital (to be credited)

3,000

2,400

1,800

7,200

Interest on Drawings (to be debited)

(350)

(250)

(150)

(750)

Salaries to A and B (to be credited)

5,000

7,500

 

12,500

Commission to A (to be credited)

3,000

 

 

3,000

Profits to be credited

4,830

1,610

1,610

8,050

Right Distribution of Profits

15,480

11,260

3,260

30,000

Wrong Distribution of Profits (3:1:1)

(18,000)

(6,000)

(6,000)

(30,000)

Net Effect

2,520 Dr.

5,260 Cr.

2,740 Dr.

-

 



Page No 1.76:

Question 67:

Journal

 

Date

Particulars

L.F.

Debit

Amount

Rs

Credit Amount

Rs

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

2,520

 

 

C’s Capital A/c

 Dr.

 

2,740

 

 

To B’s Capital A/c

 

 

 

5,260

 

(Adjustment of profit made)

 

 

 

 


Working Notes
WN 1) Calculation of Interest on Capital

WN 2) Interest on drawing is given to be
For A – Rs 350
For B – Rs 250
For C – Rs 150 

WN 3) Salaries
To A – Rs 5,000, and 
To B – Rs 7,500

WN 4) Commission to A Rs 3,000

WN 5) Calculation of Profit share of each Partner
Profit available for distribution = 30,000 – 7,200 + 750 – 12,500 – 3,000 = Rs 8,050

WN 6)

Statement Showing Adjustment

Particulars

A

B

C

Total

Interest on Capital (to be credited)

3,000

2,400

1,800

7,200

Interest on Drawings (to be debited)

(350)

(250)

(150)

(750)

Salaries to A and B (to be credited)

5,000

7,500

 

12,500

Commission to A (to be credited)

3,000

 

 

3,000

Profits to be credited

4,830

1,610

1,610

8,050

Right Distribution of Profits

15,480

11,260

3,260

30,000

Wrong Distribution of Profits (3:1:1)

(18,000)

(6,000)

(6,000)

(30,000)

Net Effect

2,520 Dr.

5,260 Cr.

2,740 Dr.

-

 

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

C’s Loan A/c

Dr.

 

20,000

 

To C’s Capital

 

 

20,000

(C’s Loan transfer to his Capital Account)

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

360

 

B’s Capital A/c

Dr.

 

240

 

To C’s Capital A/c

 

 

600

(C loan from A and B as a partner)

 

 

 

 

 

 

 

Working Notes:

WN 1 Profit before C’s Salary and Interest on Loan.

Year

Profit/

Loss

+

Salary

+

Interest on C’s loan

=

Profit before C’s 

 Salary and Interest on Loan

2006

59,000

+

9,000

+

1,800

=

69,800

2007

62,600

+

9,000

+

1,800

=

73,400

2008

(4,000)

+

9,000

+

1,800

=

6,800

2009

78,000

+

9,000

+

1,800

=

88,800

Profit before Interest on C’s Capital (for 4 years)

2,38,800

 

 

WN 2 Calculation of Interest on Capital

Interest on C’s Capital for 4 years = 1,200 × 4 = Rs 4,800

WN 3 Calculation of C’s Share of Profit as a Partner

Profit after Interest on C’s Capital = Profit before Interest on C’s Capital − Interest on C’s Capital

= 2,38,800 − 4,800 = Rs 2,34,000

C’s Profit Share as a Partner for 4 years

∴C’s Share of Interest on Capital and Profit Share as a Partner = 4,800 + 39,000 = Rs 43,800

C’s Salary and Interest on Loan as Manager = 7,200 + 36,000 = Rs 43,200

Adjustment of C’s share of Profit

C’s Share as a Partner

43,800

Less: C’s Share as a Manager

(43,200)

C will get from A and B in their profit sharing ratio

   600

 

 

Profit to be transferred by A and B in favour of C

Page No 1.76:

Question 68:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

C’s Loan A/c

Dr.

 

20,000

 

To C’s Capital

 

 

20,000

(C’s Loan transfer to his Capital Account)

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

360

 

B’s Capital A/c

Dr.

 

240

 

To C’s Capital A/c

 

 

600

(C loan from A and B as a partner)

 

 

 

 

 

 

 

Working Notes:

WN 1 Profit before C’s Salary and Interest on Loan.

Year

Profit/

Loss

+

Salary

+

Interest on C’s loan

=

Profit before C’s 

 Salary and Interest on Loan

2006

59,000

+

9,000

+

1,800

=

69,800

2007

62,600

+

9,000

+

1,800

=

73,400

2008

(4,000)

+

9,000

+

1,800

=

6,800

2009

78,000

+

9,000

+

1,800

=

88,800

Profit before Interest on C’s Capital (for 4 years)

2,38,800

 

 

WN 2 Calculation of Interest on Capital

Interest on C’s Capital for 4 years = 1,200 × 4 = Rs 4,800

WN 3 Calculation of C’s Share of Profit as a Partner

Profit after Interest on C’s Capital = Profit before Interest on C’s Capital − Interest on C’s Capital

= 2,38,800 − 4,800 = Rs 2,34,000

C’s Profit Share as a Partner for 4 years

∴C’s Share of Interest on Capital and Profit Share as a Partner = 4,800 + 39,000 = Rs 43,800

C’s Salary and Interest on Loan as Manager = 7,200 + 36,000 = Rs 43,200

Adjustment of C’s share of Profit

C’s Share as a Partner

43,800

Less: C’s Share as a Manager

(43,200)

C will get from A and B in their profit sharing ratio

   600

 

 

Profit to be transferred by A and B in favour of C

Answer:

Profit and Loss Appropriation Account

for the year ended 2009

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c (Net Profit)

31,500

A’s Capital A/c

16,000

 

 

 

B’s Capital A/c

8,000

 

 

 

C’s Capital A/c

7,500

31,500

 

 

 

31,500

 

31,500

 

 

 

 

Working Notes:

Profit for the year = Rs 31,500

Profit sharing ratio = 4 : 2 : 1

C is given a guarantee of minimum profit of Rs 7,500

C’s Actual Profit Share (i.e. Rs 4,500) is less than his Minimum Guaranteed Profit (i.e. Rs 7,500) Deficiency in C’s Profit Share = 7,500 − 4,500 = Rs 3,000

This deficiency is to be borne by A and B in their profit sharing ratio i.e. 4 : 2

Therefore,

Final Profit Share of A = 18,000 2,000 = Rs 16,000

Final Profit Share of B = 9,000 1,000 = Rs 8,000

Final Profit Share of C = 4,500 + 3,000 = Rs 7,500

Page No 1.76:

Question 69:

Profit and Loss Appropriation Account

for the year ended 2009

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c (Net Profit)

31,500

A’s Capital A/c

16,000

 

 

 

B’s Capital A/c

8,000

 

 

 

C’s Capital A/c

7,500

31,500

 

 

 

31,500

 

31,500

 

 

 

 

Working Notes:

Profit for the year = Rs 31,500

Profit sharing ratio = 4 : 2 : 1

C is given a guarantee of minimum profit of Rs 7,500

C’s Actual Profit Share (i.e. Rs 4,500) is less than his Minimum Guaranteed Profit (i.e. Rs 7,500) Deficiency in C’s Profit Share = 7,500 − 4,500 = Rs 3,000

This deficiency is to be borne by A and B in their profit sharing ratio i.e. 4 : 2

Therefore,

Final Profit Share of A = 18,000 2,000 = Rs 16,000

Final Profit Share of B = 9,000 1,000 = Rs 8,000

Final Profit Share of C = 4,500 + 3,000 = Rs 7,500

Answer:

Profit and Loss Appropriation Account

for the year ended 2012

Dr.   Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to: (WN 1)

 

Profit and Loss A/c (Net Profit)

40,000

A’s Capital A/c

16,000

 

 

 

B’s Capital A/c

14,000

 

 

 

C’s Capital A/c

10,000

40,000

 

 

 

40,000

 

40,000

 

 

 

 

 

Profit and Loss Appropriation Account

for the year ended 2013

Dr.   Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c (Net Profit)

60,000

A’s Capital A/c

24,000

 

 

 

B’s Capital A/c

24,000

 

 

 

C’s Capital A/c

12,000

60,000

 

 

 

60,000

 

60,000

 

 

 

 

Working Notes:

WN 1 Distribution of Profit for the year 2012

Profit for 2012 = Rs 40,000

Profit sharing ratio = 2 : 2 : 1

C is given a guarantee of minimum profit of Rs 10,000

Deficiency in C’s Profit Share = 10,000 − 8,000 = Rs 2,000

This deficiency is to be borne by B.

Therefore,

Final Profit Share of A = 16,000

Final Profit Share of B = 16,000 2,000 = Rs 14,000

Final Profit Share of C = 8,000 + 2,000 = Rs 10,000

WN 2 Distribution of Profit for the year 2013

Profit for 2013 = Rs 60,000

Profit sharing ratio = 2 : 2 : 1

C is given a guarantee of minimum profit of Rs 10,000

Page No 1.76:

Question 70:

Profit and Loss Appropriation Account

for the year ended 2012

Dr.   Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to: (WN 1)

 

Profit and Loss A/c (Net Profit)

40,000

A’s Capital A/c

16,000

 

 

 

B’s Capital A/c

14,000

 

 

 

C’s Capital A/c

10,000

40,000

 

 

 

40,000

 

40,000

 

 

 

 

 

Profit and Loss Appropriation Account

for the year ended 2013

Dr.   Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c (Net Profit)

60,000

A’s Capital A/c

24,000

 

 

 

B’s Capital A/c

24,000

 

 

 

C’s Capital A/c

12,000

60,000

 

 

 

60,000

 

60,000

 

 

 

 

Working Notes:

WN 1 Distribution of Profit for the year 2012

Profit for 2012 = Rs 40,000

Profit sharing ratio = 2 : 2 : 1

C is given a guarantee of minimum profit of Rs 10,000

Deficiency in C’s Profit Share = 10,000 − 8,000 = Rs 2,000

This deficiency is to be borne by B.

Therefore,

Final Profit Share of A = 16,000

Final Profit Share of B = 16,000 2,000 = Rs 14,000

Final Profit Share of C = 8,000 + 2,000 = Rs 10,000

WN 2 Distribution of Profit for the year 2013

Profit for 2013 = Rs 60,000

Profit sharing ratio = 2 : 2 : 1

C is given a guarantee of minimum profit of Rs 10,000

Answer:

Profit and Loss Appropriation Account

for the year ended March 31, 2013

Dr.

 

 

 

Cr.

Particulars

 

Amount

Rs

Particulars

Amount

Rs

Interest on Capital to:

 

 

Profit and Loss A/c (Net Profit)

79,500

A

8,000

 

 

 

B

5,000

 

 

 

C

4,000

17,000

 

 

Profit transferred to:

 

 

 

 

A

28,750

 

 

 

B

18,750

 

 

 

C

15,000

62,500

 

 

 

 

79,500

 

79,500

 

 


Working Notes:
Profit available for distribution = 79,500 – 17,000 = Rs 62,500
Profit sharing ratio = 5 : 3 : 2

C’s Minimum Guaranteed Profit = Rs 15,000 (Guaranteed by A)
But, C’s Actual Profit Share = Rs 12,500
This implies that there is deficiency of Rs 2,500 in C’s profit share 
This deficiency is to be borne by A alone.
Therefore,
A’s New Profit Share = 31,250 – 2,500 = Rs 28,750

Page No 1.76:

Question 71:

Profit and Loss Appropriation Account

for the year ended March 31, 2013

Dr.

 

 

 

Cr.

Particulars

 

Amount

Rs

Particulars

Amount

Rs

Interest on Capital to:

 

 

Profit and Loss A/c (Net Profit)

79,500

A

8,000

 

 

 

B

5,000

 

 

 

C

4,000

17,000

 

 

Profit transferred to:

 

 

 

 

A

28,750

 

 

 

B

18,750

 

 

 

C

15,000

62,500

 

 

 

 

79,500

 

79,500

 

 


Working Notes:
Profit available for distribution = 79,500 – 17,000 = Rs 62,500
Profit sharing ratio = 5 : 3 : 2

C’s Minimum Guaranteed Profit = Rs 15,000 (Guaranteed by A)
But, C’s Actual Profit Share = Rs 12,500
This implies that there is deficiency of Rs 2,500 in C’s profit share 
This deficiency is to be borne by A alone.
Therefore,
A’s New Profit Share = 31,250 – 2,500 = Rs 28,750

Answer:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c (Net Profit)

54,000

A

26,400

 

 

 

B

17,600

 

 

 

C

10,000

54,000

 

 

 

54,000

 

54,000

 

 

 

 

Working Note

C will get higher of the two:

(i) Share of Profit as per profit sharing ratio, i.e.,

(ii) Minimum guaranteed profit, i.e. Rs 10,000

Thus from net profit of Rs 54,000, minimum guaranteed profit to C of Rs 10,000 is to be adjusted first.

And the balance profit of Rs 44,000 (54,000 – 10,000) is to be shared by A and B in the ratio 3:2

 

Page No 1.76:

Question 72:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c (Net Profit)

54,000

A

26,400

 

 

 

B

17,600

 

 

 

C

10,000

54,000

 

 

 

54,000

 

54,000

 

 

 

 

Working Note

C will get higher of the two:

(i) Share of Profit as per profit sharing ratio, i.e.,

(ii) Minimum guaranteed profit, i.e. Rs 10,000

Thus from net profit of Rs 54,000, minimum guaranteed profit to C of Rs 10,000 is to be adjusted first.

And the balance profit of Rs 44,000 (54,000 – 10,000) is to be shared by A and B in the ratio 3:2

 

Answer:

Profit and Loss Appropriation Account

for the year ended 2008–09

Dr.   Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c (Net Profit)

40,000

A’s Capital A/c

19,500

 

 

 

B’s Capital A/c

15,500

 

 

 

C’s Capital A/c

5,000

40,000

 

 

 

40,000

 

40,000

 

 

 

 

Working Notes:

Profit for the year = Rs 40,000

Profit sharing ratio = 5 : 4 : 1

C is given a guarantee of minimum profit of Rs 5,000

Deficiency in C’s share = 5,000 − 4,000 = Rs 1,000

This deficiency is to be borne by A and B equally.

Therefore,

Final Profit Share of A = 20,000 500 = Rs 19,500

Final Profit Share of B = 16,000 500 = Rs 15,500

Final Profit Share of C = 4,000 + 1,000 = Rs 5,000

Page No 1.76:

Question 73:

Profit and Loss Appropriation Account

for the year ended 2008–09

Dr.   Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c (Net Profit)

40,000

A’s Capital A/c

19,500

 

 

 

B’s Capital A/c

15,500

 

 

 

C’s Capital A/c

5,000

40,000

 

 

 

40,000

 

40,000

 

 

 

 

Working Notes:

Profit for the year = Rs 40,000

Profit sharing ratio = 5 : 4 : 1

C is given a guarantee of minimum profit of Rs 5,000

Deficiency in C’s share = 5,000 − 4,000 = Rs 1,000

This deficiency is to be borne by A and B equally.

Therefore,

Final Profit Share of A = 20,000 500 = Rs 19,500

Final Profit Share of B = 16,000 500 = Rs 15,500

Final Profit Share of C = 4,000 + 1,000 = Rs 5,000

Answer:

Case (a)

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c

30,000

A’s Capital A/c

14,400

 

 

 

B’s Capital A/c

9,600

 

 

 

C’s Capital A/c

6,000

30,000

 

 

 

30,000

 

30,000

 

 

 

 

Working Notes:

Profit = Rs 30,000

Profit sharing ratio = 3 : 2 : 1

C is given a guarantee of minimum profit of Rs 6,000

Deficiency in C’s Profit Share = 6,000 − 5,000 = Rs 1,000

This deficiency is to be borne by A and B in their profit sharing ratio i.e. 3 : 2

Therefore,

Final Profit Share of A = 15,000 600 = Rs 14,400

Final Profit Share of B = 10,000 400 = Rs 9,600

Final Profit Share of C = 5,000 + 1,000 = Rs 6,000

Case (b)

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c

30,000

A’s Capital A/c

14,000

 

 

 

B’s Capital A/c

10,000

 

 

 

C’s Capital A/c

6,000

30,000

 

 

 

30,000

 

30,000

 

 

 

 

Working Notes:

Deficiency in C’s Profit Share = 6,000 − 5,000 = Rs 1,000

This deficiency is to be borne by A only.

Therefore,

Final Profit Share of A = 15,000 1,000 = Rs 14,000

Final Profit Share of B = 10,000

Final Profit Share of C = 5,000 + 1,000 = Rs 6,000

Case (c)

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c

30,000

A’s Capital A/c

15,000

 

 

 

B’s Capital A/c

9,000

 

 

 

C’s Capital A/c

6,000

30,000

 

 

 

30,000

 

30,000

 

 

 

 

Working Notes:

Deficiency in C’s Profit Share = 6,000 − 5,000 = Rs 1,000

This deficiency is to be borne by B only.

Therefore,

Final Profit Share of A = 15,000

Final Profit Share of B = 10,000 1,000 = Rs 9,000

Final Profit Share of C = 5,000 + 1,000 = Rs 6,000

Case (d)

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c

30,000

A’s Capital A/c

14,250

 

 

 

B’s Capital A/c

9,750

 

 

 

C’s Capital A/c

6,000

30,000

 

 

 

30,000

 

30,000

 

 

 

 

Working Notes:

Deficiency in C’s Profit Share = 6,000 − 5,000 = Rs 1,000

This deficiency is to be borne by A and B in the ratio of 3 : 1.

Therefore,

Final Profit Share of A = 15,000 750 = Rs 14,250

Final Profit Share of B = 10,000 250 = Rs 9,750

Final Profit Share of C = 5,000 + 1,000 = Rs 6,000



Page No 1.77:

Question 74:

Case (a)

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c

30,000

A’s Capital A/c

14,400

 

 

 

B’s Capital A/c

9,600

 

 

 

C’s Capital A/c

6,000

30,000

 

 

 

30,000

 

30,000

 

 

 

 

Working Notes:

Profit = Rs 30,000

Profit sharing ratio = 3 : 2 : 1

C is given a guarantee of minimum profit of Rs 6,000

Deficiency in C’s Profit Share = 6,000 − 5,000 = Rs 1,000

This deficiency is to be borne by A and B in their profit sharing ratio i.e. 3 : 2

Therefore,

Final Profit Share of A = 15,000 600 = Rs 14,400

Final Profit Share of B = 10,000 400 = Rs 9,600

Final Profit Share of C = 5,000 + 1,000 = Rs 6,000

Case (b)

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c

30,000

A’s Capital A/c

14,000

 

 

 

B’s Capital A/c

10,000

 

 

 

C’s Capital A/c

6,000

30,000

 

 

 

30,000

 

30,000

 

 

 

 

Working Notes:

Deficiency in C’s Profit Share = 6,000 − 5,000 = Rs 1,000

This deficiency is to be borne by A only.

Therefore,

Final Profit Share of A = 15,000 1,000 = Rs 14,000

Final Profit Share of B = 10,000

Final Profit Share of C = 5,000 + 1,000 = Rs 6,000

Case (c)

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c

30,000

A’s Capital A/c

15,000

 

 

 

B’s Capital A/c

9,000

 

 

 

C’s Capital A/c

6,000

30,000

 

 

 

30,000

 

30,000

 

 

 

 

Working Notes:

Deficiency in C’s Profit Share = 6,000 − 5,000 = Rs 1,000

This deficiency is to be borne by B only.

Therefore,

Final Profit Share of A = 15,000

Final Profit Share of B = 10,000 1,000 = Rs 9,000

Final Profit Share of C = 5,000 + 1,000 = Rs 6,000

Case (d)

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c

30,000

A’s Capital A/c

14,250

 

 

 

B’s Capital A/c

9,750

 

 

 

C’s Capital A/c

6,000

30,000

 

 

 

30,000

 

30,000

 

 

 

 

Working Notes:

Deficiency in C’s Profit Share = 6,000 − 5,000 = Rs 1,000

This deficiency is to be borne by A and B in the ratio of 3 : 1.

Therefore,

Final Profit Share of A = 15,000 750 = Rs 14,250

Final Profit Share of B = 10,000 250 = Rs 9,750

Final Profit Share of C = 5,000 + 1,000 = Rs 6,000

Answer:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c (Net Profit)

75,000

A’s Capital A/c

41,400

 

B’s Capital A/c

 

B’s Capital A/c

27,600

 

(Deficiency in Revenue)

9,000

C’s Capital A/c

15,000

84,000

 

 

 

84,000

 

84,000

 

 

 

 

Working Notes:

Deficiency in revenue guaranteed by B = 25,000 − 16,000 = Rs 9,000

∴Profit to be distributed among Partners = 75,000 + B’s deficiency in guaranteed interest

= 75,000 + 9,000 = Rs 84,000

Profit sharing ratio = 3 : 2 : 1

C is given a guarantee of minimum profit of Rs 15,000

Deficiency in C’s Profit Share = 15,000 − 14,000 = Rs 1,000

Therefore, Final Profit Share of A = 42,000 600 = Rs 41,400

Final Profit Share of B = 28,000 400 = Rs 27,600**

Final Profit Share of C =14,000 + 1,000 = Rs 15,000

** In the book, the final profit to B is given as Rs 18,600, however, as per the solution it should be Rs 27,600. The deficiency of Rs 9,000 that was guaranteed by B to the firm would not be deducted from his share as he is bearing it in form of profit.

Page No 1.77:

Question 75:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c (Net Profit)

75,000

A’s Capital A/c

41,400

 

B’s Capital A/c

 

B’s Capital A/c

27,600

 

(Deficiency in Revenue)

9,000

C’s Capital A/c

15,000

84,000

 

 

 

84,000

 

84,000

 

 

 

 

Working Notes:

Deficiency in revenue guaranteed by B = 25,000 − 16,000 = Rs 9,000

∴Profit to be distributed among Partners = 75,000 + B’s deficiency in guaranteed interest

= 75,000 + 9,000 = Rs 84,000

Profit sharing ratio = 3 : 2 : 1

C is given a guarantee of minimum profit of Rs 15,000

Deficiency in C’s Profit Share = 15,000 − 14,000 = Rs 1,000

Therefore, Final Profit Share of A = 42,000 600 = Rs 41,400

Final Profit Share of B = 28,000 400 = Rs 27,600**

Final Profit Share of C =14,000 + 1,000 = Rs 15,000

** In the book, the final profit to B is given as Rs 18,600, however, as per the solution it should be Rs 27,600. The deficiency of Rs 9,000 that was guaranteed by B to the firm would not be deducted from his share as he is bearing it in form of profit.

Answer:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c (before C’s salary) (10,710 + 1,800)

12,510

A’s Capital A/c

6,183

 

 

 

B’s Capital A/c

3,825

 

 

 

C’s Capital A/c

2,502

12,510

 

 

 

12,510

 

12,510

 

 

 

 

Working Notes:

WN 1 Salary to C = Rs 150 × 12 = Rs 1,800

WN 2

Total Amount for C (Salary and Commission) = 1,800 + 510 = Rs 2,310

WN 3 Profit before C’s Salary = 10,710 + 1,800 = Rs 12,510

WN 4 Excess of 1/5th share over Salary and Commission = 2,502 − 2,310 = Rs 192

Profit available for distribution between A and B = 12,510 − 1,800 − 510 = Rs 10,200

WN 5 A’s share of Profit after C’s deficiency = 6,375 − 192 = Rs 6,183

Page No 1.77:

Question 76:

Profit and Loss Appropriation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c (before C’s salary) (10,710 + 1,800)

12,510

A’s Capital A/c

6,183

 

 

 

B’s Capital A/c

3,825

 

 

 

C’s Capital A/c

2,502

12,510

 

 

 

12,510

 

12,510

 

 

 

 

Working Notes:

WN 1 Salary to C = Rs 150 × 12 = Rs 1,800

WN 2

Total Amount for C (Salary and Commission) = 1,800 + 510 = Rs 2,310

WN 3 Profit before C’s Salary = 10,710 + 1,800 = Rs 12,510

WN 4 Excess of 1/5th share over Salary and Commission = 2,502 − 2,310 = Rs 192

Profit available for distribution between A and B = 12,510 − 1,800 − 510 = Rs 10,200

WN 5 A’s share of Profit after C’s deficiency = 6,375 − 192 = Rs 6,183

Answer:

Journal

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

A’s Capital A/c

Dr.

 

8,500

 

To B’s Capital A/c

 

 

4,500

To C’s Capital A/c

 

 

4,000

(Profit and loss adjusted)

 

 

 

 

 

 

 

 

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.   Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Salary to:

 

Profit and Loss A/c

90,000

A

1,500

 

 

 

B

1,500

3,000

 

 

Commission to B

4,500

 

 

Profit transferred to:

 

 

 

A’s Capital A/c

35,000

 

 

 

B’s Capital A/c

28,500

 

 

 

C’s Capital A/c

19,000

82,500

 

 

 

90,000

 

90,000

 

 

 

 

Working Notes:

WN 1 Wrong Distribution of Profit in the ratio of 3 : 2 : 1

WN 2 Calculation of Right Profit Share of each Partner (3 : 3 : 2)

Profit available for distribution = 90,000 − 3,000 − 4,500

= Rs 82,500

A’s minimum guaranteed profit share = Rs 35,000

∴Deficiency in A’s Profit Share = 35,000 − 30,937.50 = Rs 4,062.50

This deficiency is to be borne by B and C in their profit sharing ratio i.e. 3 : 2

Therefore,

Final Profit Share of A = 30,937.50 + 4,062.50= Rs 35,000

Final Profit Share of B = 30,937.50 2,437.50 = Rs 28,500

Final Profit Share of C =20,625 1,625 = Rs 19,000

WN 3

Statement Showing Adjustment

Particulars

A

B

C

Total

Salary (to be credited)

 1,500

  1,500

-

 3,000

Commission (to be credited)

 

  4,500

 

 4,500

Share of Profit (to be credited)

35,000

28,500

19,000

82,500

Right distribution

36,500

34,500

19,000

90,000

Wrong Distribution of Rs 40,000 (3:2:1)

(45,000)

(30,000)

(15,000)

(90,000)

Net Effect

(8,500)

  4,500

  4,000

NIL

 

 

 

 

 

 

Page No 1.77:

Question 77:

Journal

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

A’s Capital A/c

Dr.

 

8,500

 

To B’s Capital A/c

 

 

4,500

To C’s Capital A/c

 

 

4,000

(Profit and loss adjusted)

 

 

 

 

 

 

 

 

Profit and Loss Appropriation Account

for the year ended March 31, 2014

Dr.   Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Salary to:

 

Profit and Loss A/c

90,000

A

1,500

 

 

 

B

1,500

3,000

 

 

Commission to B

4,500

 

 

Profit transferred to:

 

 

 

A’s Capital A/c

35,000

 

 

 

B’s Capital A/c

28,500

 

 

 

C’s Capital A/c

19,000

82,500

 

 

 

90,000

 

90,000

 

 

 

 

Working Notes:

WN 1 Wrong Distribution of Profit in the ratio of 3 : 2 : 1

WN 2 Calculation of Right Profit Share of each Partner (3 : 3 : 2)

Profit available for distribution = 90,000 − 3,000 − 4,500

= Rs 82,500

A’s minimum guaranteed profit share = Rs 35,000

∴Deficiency in A’s Profit Share = 35,000 − 30,937.50 = Rs 4,062.50

This deficiency is to be borne by B and C in their profit sharing ratio i.e. 3 : 2

Therefore,

Final Profit Share of A = 30,937.50 + 4,062.50= Rs 35,000

Final Profit Share of B = 30,937.50 2,437.50 = Rs 28,500

Final Profit Share of C =20,625 1,625 = Rs 19,000

WN 3

Statement Showing Adjustment

Particulars

A

B

C

Total

Salary (to be credited)

 1,500

  1,500

-

 3,000

Commission (to be credited)

 

  4,500

 

 4,500

Share of Profit (to be credited)

35,000

28,500

19,000

82,500

Right distribution

36,500

34,500

19,000

90,000

Wrong Distribution of Rs 40,000 (3:2:1)

(45,000)

(30,000)

(15,000)

(90,000)

Net Effect

(8,500)

  4,500

  4,000

NIL

 

 

 

 

 

 

Answer:

Profit and Loss Appropriation Account

for the year and March 31,2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c

2,25,000

A’s Capital A/c

96,750

 

 

 

B’s Capital A/c

72,000

 

 

 

C’s Capital A/c

56,250

2,25000

 

 

 

2,25000

 

2,25000

 

 

 

 

Working Notes:

WN 1 Calculation of Remuneration to C as a Manager

Salary to C = Rs 27,000

Commission to C = 10% of Net Profit after Salary and Commission

Net Profit after Salary and Commission = 2,25,000 27,000

= Rs 1,98,000

C’s remuneration as Manager = Salary + Commission = 27,000 + 18,000

= Rs 45,000

WN 2 Calculation of Profit Share of C as a Partner

Profit = Rs 2,25,000

Part of C’s Profit Share to be borne by A = 56,250 − 45,000 = Rs 11,250

Profit available for distribution between A and B = 2,25,000 45,000

= Rs 1,80,000

A’s Profit share after adjusting C’s deficiency = 1,08,000 − 11,250 = Rs 96,750



Page No 1.78:

Question 78:

Profit and Loss Appropriation Account

for the year and March 31,2014

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Profit and Loss A/c

2,25,000

A’s Capital A/c

96,750

 

 

 

B’s Capital A/c

72,000

 

 

 

C’s Capital A/c

56,250

2,25000

 

 

 

2,25000

 

2,25000

 

 

 

 

Working Notes:

WN 1 Calculation of Remuneration to C as a Manager

Salary to C = Rs 27,000

Commission to C = 10% of Net Profit after Salary and Commission

Net Profit after Salary and Commission = 2,25,000 27,000

= Rs 1,98,000

C’s remuneration as Manager = Salary + Commission = 27,000 + 18,000

= Rs 45,000

WN 2 Calculation of Profit Share of C as a Partner

Profit = Rs 2,25,000

Part of C’s Profit Share to be borne by A = 56,250 − 45,000 = Rs 11,250

Profit available for distribution between A and B = 2,25,000 45,000

= Rs 1,80,000

A’s Profit share after adjusting C’s deficiency = 1,08,000 − 11,250 = Rs 96,750

Answer:

Profit and Loss Appropriation Account

for the year ended March 31, 2012

Dr.

 

 

 

Cr.

Particulars

 

Amount

Rs

Particulars

Amount

Rs

Interest on Capital to:

 

 

Profit and Loss A/c (Net Profit)

4,24,000

Asgar

48,000

 

 

 

Chaman

40,000

 

 

 

Dholu

32,000

1,20,000

 

 

Salary to Chaman (Rs 7,000 × 12)

84,000

 

 

Salary to Dholu (Rs 10,000 × 4)

40,000

 

 

Profit transferred to:

 

 

 

 

Asgar

70,000

 

 

 

Chaman

40,000

 

 

 

Dholu

70,000

1,80,000

 

 

 

 

4,24,000

 

4,24,000

 

 


Working Notes:
Profit available for distribution =  4,24,000 – (1,20,000 + 84,000+ 40,000) = Rs 1,80,000
Profit sharing ratio = 4 : 2 : 3

Dholu’s Minimum Guaranteed Profit = Rs 1,10,000 (excluding interest on capital, but including salary)
Dholu’s Minimum Guaranteed Profit (excluding salary) = 1,10,000 – 40,000 = Rs 70,000
But, Dholu’s Actual Profit Share = Rs 60,000
Deficiency in Dholu’s Profit Share = 70,000 – 60,000 = 10,000
This deficiency is to be borne by Asgar alone.
Therefore,
Asgar’s New Profit Share =  80,000 – 10,000 = Rs 70,000

Page No 1.78:

Question 79:

Profit and Loss Appropriation Account

for the year ended March 31, 2012

Dr.

 

 

 

Cr.

Particulars

 

Amount

Rs

Particulars

Amount

Rs

Interest on Capital to:

 

 

Profit and Loss A/c (Net Profit)

4,24,000

Asgar

48,000

 

 

 

Chaman

40,000

 

 

 

Dholu

32,000

1,20,000

 

 

Salary to Chaman (Rs 7,000 × 12)

84,000

 

 

Salary to Dholu (Rs 10,000 × 4)

40,000

 

 

Profit transferred to:

 

 

 

 

Asgar

70,000

 

 

 

Chaman

40,000

 

 

 

Dholu

70,000

1,80,000

 

 

 

 

4,24,000

 

4,24,000

 

 


Working Notes:
Profit available for distribution =  4,24,000 – (1,20,000 + 84,000+ 40,000) = Rs 1,80,000
Profit sharing ratio = 4 : 2 : 3

Dholu’s Minimum Guaranteed Profit = Rs 1,10,000 (excluding interest on capital, but including salary)
Dholu’s Minimum Guaranteed Profit (excluding salary) = 1,10,000 – 40,000 = Rs 70,000
But, Dholu’s Actual Profit Share = Rs 60,000
Deficiency in Dholu’s Profit Share = 70,000 – 60,000 = 10,000
This deficiency is to be borne by Asgar alone.
Therefore,
Asgar’s New Profit Share =  80,000 – 10,000 = Rs 70,000

Answer:

Profit and Loss Appropriation Account

for the year ended March 31, 2012

Dr.

 

 

 

Cr.

Particulars

 

Amount

Rs

Particulars

Amount

Rs

Interest on Capital to:

 

 

Profit and Loss A/c (Net Profit)

9,50,000

Ankur

84,000

 

 

 

Bhavna

36,000

 

 

 

Disha

24,000

1,44,000

 

 

Salary to Bhavna

50,000

 

 

Commission to Disha (Rs 3,000 × 12)

36,000

 

 

Profit transferred to:

 

 

 

 

Ankur

4,14,000

 

 

 

Bhavna

1,80,000

 

 

 

Disha

1,26,000

7,20,000

 

 

 

 

9,50,000

 

9,50,000

 

 


Working Notes:
Profit available for distribution =  9,50,000 – (1,44,000 + 50,000 + 36,000) = Rs 7,20,000
Profit sharing ratio = 7 : 3 : 2

Bhavna’s Minimum Guaranteed Profit = Rs 1,70,000 (excluding interest on capital)
But, Bhavna’s Actual Profit Share = Rs 1,80,000
This implies that there is no deficiency in Bhavna’s profit share as her actual profit share (i.e. Rs 1,80,000) exceeds his minimum guaranteed profit share (i.e. Rs 1,70,000).
 
Disha’s Minimum Guaranteed Profit = Rs 1,50,000 (including interest on capital but excluding salary)
Disha’s Minimum Guaranteed Profit (excluding interest) = 1,50,000 – 24,000 = Rs 1,26,000
But, Disha’s Actual Profit Share = 1,20,000
Deficiency in Disha’s Profit Share = 1,26,000 – 1,20,000 = 6,000
This deficiency is to be borne by Ankur alone.
Therefore,
Ankur’s New Profit Share =  4,20,000 – 6,000 = Rs 4,14,000



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