12th Ts grewal 2021-22 Question 56 to 60 Accounting for partnership firm- fundamentals

Page No 2.92:

Question 56:

P and Q were partners in a firm sharing profits and losses equally. Their fixed capitals were `2,00,000 and  `3,00,000 respectively. The Partnership Deed provided for interest on capital @ 12% per annum. For the year ended 31st March, 2016, the profits of the firm were distributed without providing interest on capital.
Pass necessary adjustment entry to rectify the error.

(Outside Delhi 2017)

Answer:

Adjusting Journal Entry

Journal

Date

Particulars

L.F.

Debit

Amount
(
`)

Credit

Amount
(
`)

 

P’s Current A/c

Dr.

 

6,000

 

 

To Q’s Current A/c

 

 

 

6,000

 

(Interest on capital omitted, now adjusted.)

 

 

 


Working Notes:

Statement Showing Adjustment

Particulars

P

Q

Total

Interest on Capital @ 12%

24,000

36,000

(60,000)

   Less: Profits wrongly distributed to the extent of interest amount

(30,000)

(30,000)

60,000

Net Effect

(6,000)

6,000

NIL

 



Page No 2.92:

Question 57:

Azad and Benny are equal partners. Their capitals are `40,000 and `80,000 respectively. After the accounts for the year had been prepared, it was noticed that interest @ 5% p.a. as provided in the Partnership Deed was not credited to their Capital Accounts before distribution of profits. It is decided to pass an adjustment entry in the beginning of the next year. Record the necessary Journal entry.

Answer:

Interest on Capital

Azad

=

40,000 ×

5/100

=  `2,000

Benny

=

80,000 ×

5/100

=  `4,000


Adjustment of Profit

 

Azad

Benny

 

Total

Interest on Capital

2,000

4,000

=

6,000

  Less: Wrong distribution of Profit ` 6,000 (1: 1)

(3,000)

(3,000)

=

(6,000)

Adjusted Profit

(1,000)

(1,000)

=

NIL


Adjusting Journal Entry 

Date

Particular

L.F

Debit Amount

( `)

Credit Amount
(
`)

 

Azad's Current A/c

Dr.

 

1,000

 

 

To Benny's Current A/c

 

 

 

1,000

 

(Adjustment of profit made)

 

 

 

 

 



Page No 2.92:

Question 58:

Ram, Mohan and Sohan sharing profits and losses equally have capitals of  ` 1,20,000,  ` 90,000 and  ` 60,000 respectively. For the year ended 31st March, 2021, interest was credited to them @ 6% instead of 5%.
Give adjustment Journal entry.

Answer:

Journal

Particulars

L. F.

Debit Amount

( `)

Credit Amount

( `)

Ram’s Capital A/c

Dr.

 

300

 

To Sohan’s Capital A/c

 

 

300

(Interest on Capital was wrongly credited, now adjusted)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital at 6% p.a.

Interest on Ram’s capital=1,20,000×6/100=7,200

Interest on Mohan’s capital=90,000×6/100=5,400

Interest on Sohan’s capital=60,000×6/100=3,600

 

WN 2 Calculation of Interest on Capital at 5% p.a.

Interest on Ram’s capital=1,20,000×5/100=6,000

Interest on Mohan’s capital=90,000×5/100=4,500

Interest on Sohan’s capital=60,000×5/100=3,000

 

WN 3

Statement Showing Adjustment

Particulars

Ram

Mohan

Sohan

Total

Interest on Capital wrongly credited at 6% p.a. reversed

(7,200)

(5,400)

(3,600)

(16,200)

Interest on Capital credited at 5% p.a.

6,000

4,500

3,000

13,500

Wrong Distribution

(1,200)

(900)

(600)

(2,700)

Right Distribution of ` 2,700 (1:1:1)

900

900

900

(2,700)

Net Effect

(300)

NIL

300

NIL

 

 

 

 

 

 



Page No 2.92:

Question 59:

Ram, Shyam and Mohan were partners in a firm sharing profits and losses in the ratio of 2 : 1 : 2. Their capitals were fixed at  ` 3,00,000,  ` 1,00,000,  ` 2,00,000. For the year ended 31st March, 2021, interest on capital was credited to them @ 9% instead of 10% p.a. The profit for the year before charging interest was  ` 2,50,000.
Show your working notes clearly and pass necessary adjustment entry.

Answer:

 

Journal

Date

Particulars

L.F.

Debit Amount

( `)

Credit Amount

( `)

2020
March 31


Shyam’s Current A/c


Dr.

 


200

 

 

Mohan’s Current A/c

Dr.

 

400

 

 

To Ram’s Current A/c

 

 

600

 

(Interest on Capital adjusted)

 

 

 

 

 

 

 

 

Working Notes:

 

WN 1 Calculation of Interest on Capital 10% p.a.

Interest on Ram’s capital=3,00,000×10/100=30,000

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

Interest on Mohan’s capital=2,00,000×10/100=20,000

 

WN 2 Calculation of Interest on Capital 9% p.a.

Interest on Ram’s capital=3,00,000×9/100=2,7000

Interest on Shyam’s capital=1,00,000×9/100=9,000

Interest on Mohan’s capital=2,00,000×9/100=18,000

 

WN 3

Statement Showing Adjustment

Particulars

Ram

Shyam

Mohan

Total

Interest on Capital credited at 10% p.a.

30,000

10,000

20,000

60,000

Interest on Capital wrongly credited at 9% p.a. reversed

(27,000)

(9,000)

(18,000)

(54,000)

Right distribution

3,000

1,000

2,000

6,000

Wrong distribution of ` 6,000 (2 : 1 : 2)

(2,400)

(1,200)

(2,400)

(6,000)

Net Effect

600

(200)

(400)

NIL

 

 

 

 

 

 



Page No 2.92:

Question 60:

Simrat and Bir are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March, 2021 after closing the books of account, their Capital Accounts stood at  ` 4,80,000 and  ` 6,00,000 respectively. On 1st May, 2020, Simrat introduced an additional capital of  ` 1,20,000 and Bir withdrew  ` 60,000 from his capital. On 1st October, 2020, Simrat withdrew  ` 2,40,000 from her capital and Bir introduced  ` 3,00,000. Interest on capital is allowed at 6% p.a. Subsequently, it was noticed that interest on capital @ 6% p.a. had been omitted. Profit for the year ended 31st March, 2021 amounted to  ` 2,40,000 and the partners' drawings had been: Simrat –  ` 1,20,000 and Bir –  ` 60,000. Compute the interest on capital if the capitals are (a) fixed, and (b) fluctuating.

Answer:

Case 1: If Capitals are fixed:

Calculation of Interest on Capital

Interest on Capital Simrat=(6,00,000×6×1/100×12)+(7,20,000×6×5/100×12)+(4,80,000×6×6/100×12)=35,400

Interest on Capital Bir=(3,60,000×6×1/100×12)+(3,00,000×6×5/100×12)+(6,00,000×6×6/100×12)=27,300

Working Notes:

WN1: Calculation of Opening Capital:

Particulars

Simrat

Bir

Capital at the end

4,80,000

6,00,000

Add: Drawings out of capital

2,40,000

60,000

Less: Fresh capital introduced

1,20,000

3,00,000

Capital at the beginning

6,00,000

3,60,000

 

 

 

 

Case2: If Capitals are Fluctuating:

Calculation of Interest on Capital

Interest on Capital Simrat=(5,76,000×6×1/100×12)+(6,96,000×6×5/100×12)+(4,56,000×6×6/100×12)= 33,960

Interest on Capital Bir=(3,24,000×6×1/100×12)+(2,64,000×6×5/100×12)+(5,64,000×6×6/100×12)= 25,140

Working Notes:

WN1: Calculation of Opening Capital:

Particulars

Simrat

Bir

Capital at the end

4,80,000

6,00,000

Add: Drawings out of capital

2,40,000

60,000

Add: Drawings out of profit

1,20,000

60,000

Less: Fresh capital introduced

1,20,000

3,00,000

Less: Profit already credited

1,44,000

96,000

Capital at the beginning

5,76,000

3,24,000