12th Ts grewal 2021-22 Question 46 to 50 Accounting for partnership firm- fundamentals

Page No 2.89:

Question 46:

Sajal and Kajal are partners sharing profits and losses in the ratio of 2 : 1. On 1st April, 2020 their Capitals were: Sajal – `5,00,000 and Kajal – `4,00,000.
Prepare Profit and Loss Appropriation Account and the Partners' Capital Accounts at the end of the year after considering the following items:
(a) Interest on Capital is to be allowed @ 5% p.a.
(b) Interest on the loan advanced by Kajal for the whole year, the amount of loan being ` 3,00,000.
(c) Interest on partners' drawings @ 6% p.a. Drawings: Sajal ` 1,00,000 and Kajal ` 80,000.
(d) 10% of the divisible profit is to be transferred to Reserve.
Profit, before a effecting to the above, for year ended 31^st,2021 is 7,02,600.

Answer:

Profit and Loss Account for the year ended 31st March, 2021
Dr.			Cr.
Particulars	Amount ( `)	Particulars	Amount ( `)
Interest on Kajal’s loan@ 6% p.a.	18,000	Profit	7,02,600
Profit transferred to P/L Appropriation A/c	6,84,600

	70,260		70,260

Profit and Loss Appropriation Account for the year ended 31st March, 2021
Dr.					Cr.
Particulars		Amount ( `)	Particulars		Amount ( `)
Interest on Capital A/c:			Profit and Loss A/c		6,84,600
Sajal’s Capital A/c	25,000
Kajal’s Capital A/c	20,000	45,000	Interest on Drawings A/c:
			Sajal’s Capital A/c	3,000
Reserve		64,500	Kajal’s Capital A/c	2,400	5,400
Profit transferred to:
Sajal’s Capital A/c	3,87,000
Kajal’s Capital A/c	1,93,500	5,80,500
		6,90,000			6,90,000

Partners’ Capital Accounts
Dr.			Cr.
Particulars	Sajal ( `)	Kajal ( `)		Particulars	Sajal ( `)	Kajal ( `)
Drawings A/c	1,00,000	8,000		Balance b/d	5,00,000	4,00,000
Interest on Drawings A/c	3,000	2,400		Interest on Capital A/c	25,000	20,000
				P&L Appropriation A/c	3,87,000	1,93,500
Balance c/d	8,09,000	5,31,100
	9,12,000	6,13,500			9,12,000	6,13,500

Working Notes:

WN 1 Calculation of Interest on Capital

Interest on Sajal’s capital=5,00,000×5/100=25,000

Interest on Kajal’s capital=2,00,000×5/100=20,000

WN 2 Calculation of Interest on Drawings

Interest on Sajal’s Drawing=1,00,000×6/100×6/12=3,000

Interest on Kajal’s Drawing=80,000××6/100×6/12=2,400

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

= 6,84,600 + 5,400 - 45,000 = ` 6,45,000

Amount of reserve =6,45,000×10/100=64,500

WN 4 Calculation of Profit Share of each Partner

Profit available for Distribution = 6,84,600 + 5,400- ` 45,000- ` 64,500 = ` 5,80,500

Profit sharing ratio = 2 : 1

Sajal’s profit share = 5,80,500×2/3=3,87,000

kajal’s profit share = 5,80,500×1/3=1,93,500

Page No 2.89:

Question 47:

Ali the Bahadur are partners in a firm sharing profits and losses as Ali 70% and Bahadur 30%. Their respective capitals as at 1st April, 2020 stand as Ali ` 25,000 and Bahadur ` 20,000. The partners are allowed interest on capitals @ 5% p.a. Drawings of the partners during the year ended 31st March, 2020 amounted to ` 3,500 and ` 2,500 respectively.
Profit for the year, before charging interest on capital and annual salary of Bahadur @ `3,000, amounted to ` 40,000, 10% of divisible profit is to be transferred to Reserve.
You are asked to show Partners' Current Account and Capital Accounts recording the above transactions.

Answer:

Partners’ Capital Accounts
Dr.			Cr.
Particulars	Ali	Bahadur	Particulars	Ali	Bahadur
			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	Bahadur	Particulars	Ali	Bahadur
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	19,642	10,883	P/L Appropriation A/c	21,892	9,383
	23,142	13,383		23,142	13,383

Working Notes:

WN 1

Profit and Loss Appropriation Account for the year ended March 31, 2020
Dr.					Cr.
Particulars			Amount ( `)	Particulars	Amount ( `)
Interest on Capital:				Profit and Loss A/c	40,000
Ali		1,250
Bahadur		1,000	2,250
Reserve			3,475
Bahadur’s Salary			3,000
Profit transferred to:
Ali’s Capital A/c	21,892
Bahadur’s Capital A/c	9,383		31,275
			40,000		40,000

WN 2 Calculation of Interest on Capital

Interest on Ali’s capital=25,000×5/100=1,250

Interest on Bahadur’s capital=20,000×5/100=1,000

WN 3 Calculation of Amount to be transferred to Reserve
Amount transferred to Reserve=10% of Divisible Profits =10%×(40,000-2,250-3,000)=` 3,475

WN 4 Calculation of Profit Share of each Partner

Profit available for distribution = 40,000 -` 2,250 -` 3,000- ` 3,475 = ` 31,275

Ali's Profit Share=31,275×70/100=21,892

Bahadur's Profit Share=31,275×30/100=9,383

Page No 2.90:

Question 48:

A, B and C were partners in a firm having capitals of ` 50,000 ; ` 50,000 and ` 1,00,000 respectively. Their Current Account balances were A: ` 10,000; B: ` 5,000 and C: ` 2,000 (Dr.). According to the Partnership Deed the partners were entitled to an interest on Capital @ 10% p.a. C being the working partner was also entitled to a salary of ` 12,000 p.a. The profits were to be divided as:
(a) The first ` 20,000 in proportion to their capitals.
(b) Next ` 30,000 in the ratio of 5 : 3 : 2.
(c) Remaining profits to be shared equally.
The firm earned net profit of ` 1,72,000 before charging any of the above items.
Prepare Profit and Loss Appropriation Account and pass necessary Journal entry for the appropriation of profits.

Answer:

Profit and Loss Appropriation Account
Dr.							Cr.
Particulars			Amount ( `)	Particulars			Amount ( `)
Interest on Capital:				Profit and Loss A/c (Net Profit)			1,72,000
A’s Current A/c		5,000
B’s Current A/c		5,000
C’s Current A/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 ( `)	Credit Amount ( `)

	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

Interest on A’s capital=50,000×10/100=5,000

Interest on B’s capital=50,000×10/100=5,000

Interest on C’s capital=1,00,000×10/100=10,000

WN 2 Calculation of Profit Share of each Partner

Profits available for Distribution = 1,72,000- ` 20,000 - ` 12,000 = ` 1,40,000

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

A’s profit share=20,000×1/4=5,000

B’s profit share=20,000×1/4=5,000

C’s profit share=20,000×2/4=10,000

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

A’s profit share=30,000×5/10=15,000

B’s profit share=30,000×3/10=9,000

C’s profit share=30,000×2/10=6,000

3. Remaining Profit available for distribution = ` 1,40,000 -` 20,000- ` 30,000 = ` 90,000

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

Profir Share of A,B,C each =90,000 ×1/3=30,000

Therefore,

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

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

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

Page No 2.90:

Question 49:

A, B and C are partners sharing profits and losses in the ratio of A 1/2, B 3/10, C 1/5 after providing for interest @ 5% on their respective capitals, viz., A ` 50,000; B ` 30,000 and C ` 20,000 and allowing B and C a salary of ` 5,000 each per annum. During the year ended 31st March, 2021, A has drawn ` 10,000 and B and C in addition to their salaries have drawn ` 2,500 and ` 1,000 respectively. Profit and Loss Account for the year ended 31st March, 2020 showed a net profit of ` 45,000. On 1st April, 2020, the balances in the Current Accounts of the partners were A (Cr.) `4,500; B (Cr.) ` 1,500 and C (Cr.) ` 1,000. Interest is not charged on Drawings or Current Account balances. Show Partners' Capital and Current Accounts as at 31st March, 2021 after division of profits in accordance with the partnership agreement.

Answer:

Profit and Loss Appropriation Account for the year ended 31st March, 2021
Dr.						Cr.
Particulars				Amount ( `)	Particulars	Amount ( `)
Interest on Capital:					Profit and Loss A/c	45,000
A’s Current A/c			2,500
B’s Current A/c			1,500
C’s Current A/c			1,000	5,000
Salary to:
B’s Current A/c			5,000
C’s Current A/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

Interest on A’s capital=50,000×5/100=2,500

Interest on B’s capital=30,000×5/100=1,500

Interest on C’s capital=20,000×5/100=1,000

WN 2 Calculation of Profit Share of each Partner

Profit available for Distribution = 45,000 -` 15,000 = ` 30,000

A’s profit share=30,000×1/2=15,000

B’s profit share=30,000×3/10=9,000

C’s profit share=30,000×1/5=6,000

Page No 2.90:

Question 50:

Amit, Binita and Charu are three partners. On 1st April, 2020, their Capitals stood as: Amit `1,00,000, Binita `2,00,000 and Charu `3,00,000. It was decided that:
(a) they would receive interest on Capital @ 5% p.a.,
(b) Amit would get a salary of ` 10,000 per month,
(c) Binita would receive commission @ 5% of net profit after deduction of commission, and
(d) 10% of the net profit would be transferred to the General Reserve.
Before the above items were taken into account, the profit for the year ended 31st March, 2021 was `5,00,000.
Prepare Profit and Loss Appropriation Account and the Capital Accounts of the partners.

Answer:

Profit and Loss Appropriation Account for the year ended March 31, 2021
Dr.					Cr.
Particulars			Amount ( `)	Particulars	Amount ( `)
Interest on Capital:				Profit and Loss A/c (Net Profit)	5,00,000
Amit’s Capital A/c	5,000
Binita’s Capital A/c	10,000
Charu’s Capital A/c	15,000		30,000
Salary to Amit (10,000 × 12)			1,20,000
Commission to Binita			23,810
General Reserve			50,000
Profit transferred to:
Amit’s Capital A/c		92,063
Binita’s Capital A/c		92,063
Charu’s Capital A/c		92,064	2,76,190
			33,360		33,360

Partners’ Capital Accounts
Dr.					Cr.
Particulars	Amit	Binita	Charu	Particulars		Amit	Binita	Charu
				Balance b/d		1,00,000	2,00,000	3,00,000
				Interest on Capital A/c		5,000	10,000	15,000
				Salary A/c		1,20,000	–	–
				Commission		–	23,810	–
Balance c/d	3,17,063	3,25,873	4,07,064	P/L Appropriation A/c		92,063	92,063	92,064
	3,17,063	3,25,873	4,07,064			3,17,063	3,25,873	4,07,064