12th Ts grewal 2020-21Question 16 to 20 Accounting for partnership firm- fundamentals

Double Entry Book Keeping Ts Grewal Volume-I 2021-22

Solutions for Class 12 Commerce Accountancy

Chapter 2 - Accounting For Partnership Firms Fundamentals

Page No 2.84:

Question 16;

Atul and Mithun are partners sharing profits m the ratio of 3: 2

Balances as on 1st April 2020 were as follows:

Capita! Accounts (fixed): Atul- `5,00,000 and Mithun- `6,00,000

Loan Accounts: Atul - `3,00,000 (Cr.) and Mithun - `2,00,000 (Dr.)

It was agreed to allow and charge interest @ 8% p.a. Partnership Deed provided to allow interest on capital @ 10% p.a. Interest on Drawings was charged `5,000 each.

Profit before giving effect to above was `2,28,000 for the year ended 31st March, 2020.

Prepare Profit and Loss Appropriation Account.

Answer; Answer:

	Profit and Loss Appropriation Account
Dr.						Cr.
Particulars			Amount `	Particulars		Amount `
Interest on Capital:				Profit and Loss A/c (Net Profit)		2,20,000
Atul’s Capital A/c		50,000		Interest on Capital:
Mithul’s Capital A/c		60,000	1,10,000	Atul’s Capital A/c	5,000
				Mithul’s Capital A/c	5,000
Profit transferred to:
Atul’s Capital A/c		72,000
Mithul’s Capital A/c		48,000	1,20,000
			2,30,000			2,30,000

Working Notes:

WN1 Profit After allowed and charged Atul and Mithul Respectively

2,28,000 -24,000 +16,000 = 2,20,000
WN2 interest allowed on loan given by Atul

Interst on loan=3,00,000×8/100 = 24,000

WN3 interest Charged on loan given to Mithul

Interst on loan=2,00,000×8/100=16,000

WN4 Calculation of Interest on Capital

Interst on Atul’s loan=5,00,000×10/100=50,000

Interst on Mithul's loan=6,00,000×10/100=60,000

WN5 Calculation of Profit Share of each Partner

Profit Share of Atul =1,20,000×3/5=72,000

Profit Share of Mithul =1,20,000×2/5=48,000

Page No 2.84:

Question 17:

Reema and Seema are partners sharing profits equally. The Partnership Deed provides that both Reema and Seema will get monthly salary of ` 15,000 each, Interest on Capital will be allowed @ 5% p.a. and Interest on Drawings will be charged @ 10% p.a. Their capitals were ` 5,00,000 each and drawings during the year were ` 60,000 each.
The firm incurred a loss of ` 1,00,000 during the year ended 31st March, 2019.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2019.

Answer:

Profit and Loss Appropriation Account for the year ended March 31, 2019
Dr.					Cr.
Particulars	Amount `	Particulars		Amount `
Profit and Loss A/c	1,00,000	Interest on Drawings A/c:
		Reema	3,000
		Seema	3,000	6,000
		Loss transferred to
		Reema	47,000
		Seema	47,000	94,000
	1,00,000			1,00,000

Note: Since the firm has incurred loss, no interest on capital and salary will be allowed to the partners. However, interest on drawings will be charged from each of them @ 10% p.a. on the amounts withdrawn by them for an average period of six months.

Page No 2.84:

Question 18:

Bhanu and Partab are partners sharings profits equally. Their fixed capitals as on 1st April, 2019 are ` 8,00,000 and ` 10,00,000 respectively. Their drawings during the year were ` 50,000 and ` 1,00,000 respectively. Interest on Capital is a charge and is to be allowed @ 10% p.a. and interest on drawings is to be charged @ 15% p.a. Net Profit for the year ended 31st March, 2020 was ` 1,20,000.
Prepare Profit and Loss Appropriation Account.

Answer:

Profit and Loss Appropriation Account for the year ended March 31, 2020
Dr.							Cr.
Particulars		Amount ( `)	Particulars			Amount ( `)
Interest on Capital A/c:			Profit and Loss A/c			1,20,000
Bhanu’s Current A/c	80,000		Interest on Drawings A/c:
Partap’s Current A/c	1,00,000	1,80,000	Bhanu’s Current A/c	3,750
			Partap’s Current A/c		7,500	11,250
			Loss transferred to
			Bhanu’s Current A/c		24,375
			Partap’s Current A/c		24,375	48,750

		1,80,000				1,80,000

Page No 2.85:

Question 19:

Amit and Sumit entered into partnership on 1st April, 2019 contributing ` 1,50,000 and ` 2,50,000 respectively towards capital. The Partnership Deed provided for interest on capital @ 10% p.a. It also provided that Capital Accounts shall be maintained following Fixed Capital Accounts method. The firm earned net profit of ` 1,00,000 for the year ended 31st March 2020.
Pass the Journal entry for interest on capital.

Answer:

Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2020
March 31	Profit & Loss Appropriation A/c	Dr.		40,000
	To Amit’s Current A/c				15,000
	To Sumit’s Current A/c				25,000
	(Interest on capital transferred to Profit & Loss Appropriation A/c)

Working Notes:

WN1: Calculation of Interest on Capital:
Amit's Interest on Capital=1,50,000×10/100=` 15,000

Sumit's Interest on Capital=2,50,000×10/100=` 25,000

Page No 2.85:

Question 20:

Kamal and Kapil are partners having fixed capitals of ` 5,00,000 each as on 31st March, 2019. Kamal introduced further capital of ` 1,00,000 on 1st October, 2019 whereas Kapil withdrew ` 1,00,000 on 1st October, 2019 out of capital.
Interest on capital is to be allowed @ 10% p.a.
The firm earned net profit of ` 6,00,000 for the year ended 31st March 2020.
Pass the Journal entry for interest on capital and prepare Profit and Loss Appropriation Account.

Answer:

Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2020
March 31	Profit & Loss Appropriation A/c	Dr.		1,00,000
	To Kamal’s Current A/c				55,000
	To Kapil’s Current A/c				45,000
	(Interest on capital transferred to Profit & Loss Appropriation A/c)

Profit and Loss Appropriation Account for the year ended 31 March 2020
Dr.				Cr.
Particulars		Amount ( `)	Particulars	Amount ( `)
Interest on Capital A/c:			Profit and Loss A/c	6,00,000
Kamal	55,000
Kapil	45,000	1,00,000
Profit transferred to:
Kamal’s Current A/c	2,50,000
Kapil’s Current A/c	2,50,000	5,00,000
		6,00,000		6,00,000