12th Ts grewal 2021-22 Question 26 to 30 Accounting for partnership firm- fundamentals


Page No 2.86:

Question 26: A and B are partners in the ratio of 3:2. The firm maintains Fluctuating Capital Accounts and the balance of the same as on 31st March, 2020 amounted to R 1,60,000 and 1,40,000 for A and B respectively. Their drawings during the year were 30,000 each.

As per Partnership Deed, interest on capital@ 10% p.a. on opening capitals had been provided to them.

Calculate opening capitals of partners given that their profit was 90,000. Show your workings clearly.

Answer:

Calculation of opening Capital

 

A

B

Closing Capital

Add; Drawings

1,60,000

30,000

1,40,000

30,000

 

Less: Profit already Credited (WN)

1,90,000

37,800

1,70,000

25,200

 

Less: Interest on Capital (WN)

1,52,200

13,836

1,44,800

13,164

Opening Capital

1,38,364

1,31,636

 

Working Notes:

Total Capital of A and B (1,60,000+1,40,000)

Add: Drawings (30,000×2)

=

=

3,00,000

60,000

 

Less: Profits (Including Interest on Capital)

 

=

3,60,000

90,000

Total opening Capital Including Interest on Capital

=

2,70,000

 

Interest on Capital @10 p.a. 2,70,000 is 27,000

Divisible Profits= 90,000 - 27,000 = 63,000

Distribution of profits

A = 63,000×3/5=37,800

B = 63,000×2/5=25,200

 



Page No 2.86:

Question 27:

Following is the extract of the Balance Sheet of Neelkant and Mahadev as on 31st March, 2021.

BALANCE SHEET
as at 31st March, 2021

Liabilities

 `

Assets

 `

 Neelkant's Capital

10,00,000

 Sundry Assets

30,00,000

 Mahadev's Capital

10,00,000

 

  

 Neelkant's Current A/c

1,00,000

 

 

 Mahadev' Current A/c

1,00,000

 

 

 Profit and Loss Appropriation A/c (2020-21)

8,00,000

 

 

 

30,00,000

 

30,00,000

 

 

 

 


During the year, Mahadev's drawings were  ` 30,000. Profits during the year ended 31st March, 2021 is  ` 10,00,000. Calculate interest on capital @ 5% p.a. for the year ending 31st March, 2021.

Answer:

Interest on Capital

Neelkant’s

= 10,00,000×5/100=50,000

Mahadev’s

= 10,00,000×5/100=50,000


Note: In this question, as the balances of both Partner's Capital Account and of Partner's Current Account are mentioned, so it is clear that the capital of the partners is fixed.

As we know, when the capital of the partners is fixed, drawings and interest on capital does not affect the capital balances of the partners. Rather, it would affect their current account balances. Therefore, in this case, capital at the beginning (i.e. opening capital) and capital at the end (i.e. closing capital) of the year would remain same. Thus, the interest on capital is calculated on fixed capital balances (given in the Balance Sheet of the question).

 



Page No 2.87:

Question 28:

From the following Balance Sheet of Long and Short, calculate interest on capital @ 8% p.a. for the year ended 31st March, 2021. 

BALANCE SHEET
as at 31st March, 2021

Liabilities

 `

Assets

 `

Long's Capital A/c

1,20,000

Fixed Assets

3,00,000

Short's Capital A/c

 

1,40,000

Other Assets

   60,000

General Reserve

 

1,00,000

 

 

 

3,60,000

 

3,60,000

 

 

 

 

During the year, Long withdrew  ` 40,000 and Short withdrew  ` 50,000. Profit for the year was  ` 1,50,000 out of which  ` 1,00,000 was transferred to General Reserve.

Answer:

Calculation of Capital at the beginning (as on April 01, 2020)

 

Particulars

Long
( `)

Short
( `)

Capital at the end

1,20,000

1,40,000

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

(25,000)

(25,000)

Add: Adjusted Drawings

40,000

50,000

Capital in the beginning

1,35,000

1,65,000

 

 

 

 

Long’s Interest on capital= 1,35,000×8/100=10,800

Short’s Interest on capital= 1,65,000×8/100=13,200

 



Page No 2.87:

Question 29:

Amit and Bramit started business on 1st April, 2020 with capitals of  ` 15,00,000 and  ` 9,00,000 respectively. On 1st October, 2020, they decided that their capitals should be  ` 12,00,000 each. The necessary adjustments in capitals were made by introducing or withdrawing by cheque. Interest on capital is allowed @ 8% p.a. Compute interest on capital for the year ended 31st March, 2021.

Answer:

 

Calculation of Interest on Amit’s Capital

 

Date

Capital

×

Period

=

Product

April 01, 2020 to Sept. 30, 2020

15,00,000

×

6

=

90,00,000

Oct. 01, 2020 to March 31, 2021

12,00,000

×

6

=

72,00,000

Sum of Product

 

1,62,00,000

 

 

 

Interest on Capital = sum of product×Rate of drawing/100×1/ 12

Interest on Capital =1,62,00,000×8/100×1/12  =1,08,000

 

Calculation of Interest on Bramit’s Capital

 

Date

Capital

×

Period

=

Product

April 01, 2020 to Sept. 30, 2020

9,00,000

×

6

=

54,00,000

Oct. 01, 2020 to March 31, 2021

12,00,000

×

6

=

72,00,000

Sum of Product

 

1,26,00,000

 

Interest on Capital = sum of product×Rate of drawing/100×1/ 12

Interest on Capital =1,26,00,000×8/100×1/12  =84,000

 



Page No 2.87:

Question 30:

Moli and Bholi contribute  `20,000 and  `  10,000 respectively towards capital. They decide to allow interest on capital @ 6% p.a. Their respective share of profits is 2 : 3 and the net profit for the year is `1,500. Show distribution of profits:
(i) where there is no agreement except for interest on capitals; and
(ii) where there is an agreement that the interest on capital as a charge.

 

Answer:

 

Calculation of Interest on Capital

 

Interest on Moli's Capital= 20,000×6/100=1,200

Interest on Bholi's Capital=10,000×6/100=600

Total Amount of Interest on Capital=1,200+600=1,800

 

Case (a) 

Where there is no clear agreement except for interest on capitals

Profit for the year ended =  `  1,500

Total amount of interest =  `  1,800

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

Particulars

   Moli

:

Bholi

Interest on Capital

1,200

:

600

or, Ratio of interest on Capital

2

:

1

Moli will get Interest on Capital=1,500×2/3=1,000

Bholi will get Interest on Capital=1,500×1/3=500

 

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.

Interest on Moli's Capital=20,000×6/100=1,200

Interest on Bholi's Capital=10,000×6100=600

Total Amount of Interest on Capital=(1,200+600)=1,800

Total Profit of the firm =  `  1,500

Therefore, loss to the firm amounts to  `300(`1,500-`1,800). This loss is to shared by Moli and Bholi in their profit sharing ratio that is 2 : 3. 

Loss to Moli=300×2/5= 120

Loss to Bholi=300×3/5=180