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.

 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.

 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.

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.

 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

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.

 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

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.

 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

Working Notes:

WN1: Calculation of Interest on Capital:

Kamal = (5,00,000×10×6÷100×12) + (6,00,000×10×6÷100×12) = `. 55,000

Kapil=(5,00,000×10×6÷100×1) + (4,00,000×10×6÷100×12) = `. 45,000

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Chapter-1: Accounting For Partnership Firms-Fundamentals | 2021-2022

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