Page No 2.85:
Question 21:
Simran and Reema
are partners sharing profits in the ratio of 3 : 2. Their capitals as on 31st
March, 2020 were `2,00,000 each whereas
Current Accounts had balances of `50,000 and `25,000 respectively
interest is to be allowed @ 5% p.a. The firm earned net profit of `3,00,000 for the year
ended 31st March 2021.
Pass the Journal entries for interest on capital and distribution of profit.
Also prepare Profit and Loss Appropriation Account for the year.
Answer:
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Journal |
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Date |
Particulars |
L.F. |
Debit Amount ( `) |
Credit Amount ( `) |
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Profit & Loss Appropriation A/c |
Dr. |
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20,000 |
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To Simran’s Current A/c |
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10,000 |
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To Reema’s Current A/c |
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10,000 |
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(Interest on capital transferred to Profit & Loss
Appropriation A/c) |
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Profit & Loss Appropriation A/c |
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2,80,000 |
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To Simran’s Current A/c |
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1,68,000 |
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To Reema’s Current A/c |
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1,12,000 |
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(Profit transferred to Partners’ Current A/c) |
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Profit and Loss Appropriation
Account for the year ended 31 March 2021 |
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Dr. |
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Cr. |
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Particulars |
Amount ( `) |
Particulars |
Amount ( `) |
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Interest on Capital A/c: |
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Profit and Loss A/c |
3,00,000 |
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Simran’s Current A/c |
10,000 |
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Reema’s Current A/c |
10,000 |
20,000 |
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Profit transferred to: |
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Simran’s
Current A/c |
1,68,000 |
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Reema’s
Current A/c |
1,12,000 |
2,80,000 |
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3,00,000 |
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3,00,000 |
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Working Notes:
WN1: Calculation of Interest on Capital
Simran's Interest on Capital = 2,00,000×5÷100=` 10,000
Reema's Interest on Capital = 2,00,000×5÷100=` 10,000
Page No 2.85:
Question 22:
Anita and Ankita
are partners sharing profits equally. Their capitals, maintained following
Fluctuating Capital Accounts Method, as on 31st March, 2020 were ` 5,00,000 and ` 4,00,000
respectively. Partnership Deed provided to allow interest on capital @ 10% p.a.
The firm earned net profit of ` 2,00,000 for the
year ended 31st March, 2021.
Pass the Journal entry for interest on capital.
Answer:
|
Journal |
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Date |
Particulars |
L.F. |
Debit Amount ( `) |
Credit Amount ( `) |
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|
2021 |
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March
31 |
Profit & Loss Appropriation A/c |
Dr. |
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90,000 |
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To Anita’s Capital A/c |
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50,000 |
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To Ankita’s Capital A/c |
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40,000 |
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(Interest on capital transferred to Profit & Loss
Appropriation A/c) |
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Working Notes:
WN1: Calculation of Interest on Capital
Anita's Interest on Capital = 5,00,000×10÷100=` 50,000
Ankita's Interest on Capital = 4,00,000×10÷100=` 40,000
Page No 2.85:
Question 23:
Ashish and Aakash are partners sharing profit in the ratio of 3 : 2. Their Capital Accounts showed a credit balance of ` 5,00,000 and ` 6,00,000 respectively as on 31st March, 2021 after debit of drawings during the year of ` 1,50,000 and ` 1,00,000 respectively. Net profit for the year ended 31st March, 2021 was ` 5,00,000.
Interest on
capital is to be allowed @ 10% p.a.
Pass the Journal entry for interest on capital and prepare Profit and Loss
Appropriation Account.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit Amount ( `) |
Credit Amount ( `) |
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|
2021 |
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March 31 |
Profit & Loss
Appropriation A/c |
Dr. |
|
1,35,000 |
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To
Ashish’s Capital A/c |
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65,000 |
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To
Aakash’s Capital A/c |
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70,000 |
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(Interest on capital
transferred to Profit & Loss Appropriation A/c) |
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3,65,000 |
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Profit & Loss
Appropriation A/c |
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2,19,000 |
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To
Ashish’s Capital A/c |
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1,46,000 |
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To
Akash’s Capital A/c |
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(Profit transferred to
Partners’ Capital A/c) |
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Profit and Loss
Appropriation Account for the year
ended 31 March 2021 |
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Dr. |
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Cr. |
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Particulars |
Amount ( `) |
Particulars |
Amount ( `) |
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Interest on Capital A/c: |
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Profit and Loss A/c |
5,00,000 |
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Ashish’s Capital A/c |
65,000 |
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Aakash’s Capital A/c |
70,000 |
1,35,000 |
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Profit transferred to: |
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Ashish’s Capital A/c |
2,19,000 |
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Aakash’s Capital A/c |
1,46,000 |
3,65,000 |
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5,00,000 |
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5,00,000 |
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Working Notes:
WN1: Calculation of Opening Capital:
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Particulars |
Ashish |
Aakash |
|
Capital at the end |
5,00,000 |
6,00,000 |
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Add: Drawings made |
1,50,000 |
1,00,000 |
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Capital at the beginning |
6,50,000 |
7,00,000 |
WN2: Calculation of Interest on Capital
Ashish's Interest on Capital = 6,50,000×10/100=` 65,000
Aakash's Interest on Capital = 7,00,000×10/100=` 70,000
Page No 2.86:
Question 24:
Naresh and Sukesh
are partners with capitals of ` 3,00,000 each as on
31st March, 2021. Naresh had withdrawn ` 50,000 against capital on 1st October, 2020 and also ` 1,00,000 besides the
drawings against profit. Sukesh also had drawings of ` 1,00,000.
Interest on capital is to be allowed @ 10% p.a.
Net profit for the year was ` 2,00,000, which is
yet to be distributed.
Pass the Journal entries for interest on capital and distribution of profit.
Answer:
|
Journal |
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Date |
Particulars |
L.F. |
Debit Amount ( `) |
Credit Amount ( `) |
|
|
2021 |
|
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|
March 31 |
Profit & Loss
Appropriation A/c |
Dr. |
|
82,500 |
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To
Naresh’s Capital A/c |
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42,500 |
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To
Sukesh’s Capital A/c |
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40,000 |
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(Interest on capital
transferred to Profit & Loss Appropriation A/c) |
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Profit & Loss
Appropriation A/c |
Dr. |
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1,17,500 |
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To
Naresh’s Capital A/c |
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58,750 |
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To
Sukesh’s Capital A/c |
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58,750 |
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(Profit transferred to
Partners’ Capital A/c) |
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Working
Notes:
WN1:
Calculation of Opening Capital:
|
Particulars |
Naresh |
Sukesh |
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Capital at the end |
3,00,000 |
3,00,000 |
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Add: Withdrawal of
capital |
50,000 |
- |
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Add: Drawings
against profit |
1,00,000 |
1,00,000 |
|
Capital at the beginning |
4,50,000 |
4,00,000 |
WN2:
Calculation of Interest on Capital
Naresh=(4,50,000×10/100×6/12)+(4,00,000×10/100×6/12)=` 42,500
Sukesh=4,00,000×10/100=` 40,000
Page No 2.86:
Question 25:
On 1st April, 2013, Jay and Vijay entered into partnership for supplying laboratory equipments to government schools situated in remote and backward areas. They contributed capitals of `80,000 and `50,000 respectively and agreed to share the profits in the ratio of 3 : 2. The partnership Deed provided that interest on capital shall be allowed at 9% per annum. During the year the firm earned a profit of `7,800. Showing your calculations clearly, prepare 'Profit and Loss Appropriation Account' of Jay and Vijay for the year ended 31st March, 2014.
Answer:
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Profit and Loss
Appropriation Account for the year
ended March 2014 |
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Dr. |
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Cr. |
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Particulars |
Amount ` |
Particulars |
Amount ` |
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Interest on Capital A/c: |
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Profit and Loss A/c |
7,800 |
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Jay’s Capital A/c |
4,800 |
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Vijay’s Capital A/c |
3,000 |
7,800 |
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7,800 |
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7,800 |
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Working Notes:
WN1: Calculation
of Interest on Capital
Interest
on Jay' s Capital=80,000×9/100=7,200
Interest
on Vijay' s Capital=50,000×9/100=4,500
Total interest = 7,200+4,500 =11,700 (Which is more than
the profit)
WN2: Calculation
of Proportionate Interest on Capital
Jay' s proportion of interest =7,800×7,200/11,700=4,800
Vijay's proportion of interest =7,800×4,500/11,700=3,000
Note:
Interest on capital is to be treated as an appropriation of profits and is to
be provided to the extent of available profits i.e. ` 7,800.
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