12th Ts grewal 2021-22 Question 6 to 10 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 2.82:

Question 6:

Harshad and Dhiman are in partnership since 1st April, 2019. No partnership agreement was made. They contributed  ` 4,00,000 and  ` 1,00,000 respectively as capital. In addition, Harshad advanced an amount of  ` 1,00,000 to the firm on 1st October, 2019. Due to long illness, Harshad could not participate in business activities from 1st August, 2019 to 30th September, 2019.  Profit for the year ended 31st March, 2020 was  ` 1,80,000. Dispute has arisen between Harshad and Dhiman.
Harshad Claims :
(i) He should be given interest @ 10% per annum on capital and loan;
(ii) Profit should be distributed in the ratio of capital;
Dhiman Claims :
(i) Profit should be distributed equally;
(ii) He should be allowed
 ` 2,000 p.m. as remuneration for the period he managed the business in the absence of Harshad;
(iii) Interest on Capital and loan should be allowed @ 6% p.a.
You are required to settle the dispute between Harshad and Dhiman. Also prepare Profit and Loss Appropriation Account.

Answer:

DISTRIBUTION OF PROFITS 

Harshad Claims:

Decisions
(i) If there is no agreement on interest on partner’s capital, according to Indian partnership act 1932, no interest will be allowed to partners.
(ii) If there is no agreement on the matter of profit sharing, according to partnership act 1932, profit shall be distributed equally.

Dhiman Claims:

Decisions
(i) Dhiman claim is justified, according partnership act 1932 if there is no agreement on the matter of profit distribution, profit shall be distributed equally.
(ii) No salary will be allowed to any partner because there is no agreement on matter of remuneration.
(iii) Dhiman’s claim is not justified on the matter of interest on capital but justified on the matter of interest on loan. If there is no agreement on interest on partner’s loan, Interest shall be provided at 6% p.a.
 

Profit and Loss Adjustment Account

Dr.

for the year ended 31st March, 2020

Cr.

Particulars

Amount
(
`)

Particulars

Amount
(
`)

Interest on Partner’s Loan

 

Profit and Loss A/c

1,80,000

Harshad 1,00,000 × (6/100) × (6/12)

3,000

 

 

Profit and Loss Appropriation A/c
 

1,77,000

 

 

 

1,80,000

 

1,80,000

 

 

 

 

 

Profit and Loss Appropriation Account

Dr.

for the year ended 31st March, 2020

Cr.

Particulars

Amount
(
`)

Particulars

Amount
(
`)

Profit transferred to

 

Profit and Loss Adjustment A/c

1,77,000

Harshad’s Capital

88,500

 

 

Dhiman’s Capital

88,500

 

 

 

 

 

 

 

1,77,000

 

1,77,000

 

 

 

 



 

Page No 2.82:

Question 7:

Sita and Geeta are partners in a firm sharing profits in the ratio of 3 : 2. They had advanced to the firm a sum of  ` 30,000 as a loan in their profit-sharing ratio on 1st October, 2017. The Partnership Deed is silent on interest on loans from partners. Compute interest payable by the firm to the partners, assuming the firm closes its books every year on 31st March.

Answer:

Amount advanced by the Partners = ` 30,000

Profit sharing ratio = 3 : 2

Advanced by Sita =30,000×3/5=18,000

Advanced by Geeta =30,000×2/5=12,000

Time Period (from October 01, 2017 to March 31, 2019) = 6 months

Interest rate = 6% p.a.

Calculation of Interest on Advances

Interest on Sita' s advance=18,000×6/100×6/12=540

Interest on Geeta' s advance=12,000×6/100×6/12=360

Note: In the absence of a partnership agreement regarding rate of interest on loans and advances, interest is provided at 6% p.a.



 

Page No 2.83:

Question 8:

X and Y are partners sharing profits and losses in the ratio of 2 : 3 with capitals  ` 2,00,000 and  ` 3,00,000 respectively. On 1st October, 2019, X and Y gave loans of   ` 80,000 and  ` 40,000 respectively to the firm. Show distribution of profits/losses for the year ended 31st March, 2020 in each of the following alternative cases:
Case 1 : If the profits before interest for the year amounted to
 ` 21,000.
Case 2 : If the profits before interest for the year amounted to
 ` 3,000.
Case 3 : If the profits before interest for the year amounted to
 ` 5,000.
Case 4 : If the loss before interest for the year amounted to
 ` 1,400.

Answer:

Calculation of Interest on Loan

 

Interst on X’s advandce = 80,000×6/100×6/12=2400

Interst on Y's advandce = 40,000×6/100×6/12=1200

 

Case 1- If Profits before any interest for the year amounted to  ` 21,000

Profit and Loss Account

for the year ended March 31, 2020

Dr.

 

 

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

Interest on X’s Loan

2,400

Profit

21,000

Interest on Y’s Loan

1,200

 (before  interest)                    

 

Profit transferred to

 

 

 

X’s Capital A/c

(17,400 × 2/5)

6,960

 

 

 

Y’s Capital A/c

(17,400 × 3/5)

10,440

17,400

 

 

 

21,000

 

21,000

 

 

 

 

Case 2- If Profits before any interest for the year amounted to  ` 3,000

Profit and Loss Account

for the year ended March 31, 2020

Dr.

 

 

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

Interest on X’s Loan                    

2,400

Profit (before interest)

3,000

Interest on Y’s Loan

1,200

Loss transferred to-

 

 

 

X’s Capital A/c (600 × 2/5)

240

 

 

 

Y’s Capital A/c (600 × (3/5)

360

600

 

 

 

 

 

3,600

 

3,600

 

 

 

 

Case 3- If Profits before any interest for the year amounted to  ` 5,000

Profit and Loss Account

for the year ended March 31, 2020

Dr.

 

 

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

Interest on X’s Loan

2,400

Profit (before interest)                     

5,000

Interest on Y’s Loan

1,200

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

(1400 × 2/5)

560

 

 

 

Y’s Capital A/c

(1400 × 3/5)

840

1,400

 

 

 

5,000

 

5,000

 

 

 

 

 

Case 4- If Loss before any interest for the year amounted to  ` 1,400

Profit and Loss Account

for the year ended March 31, 2020

Dr.

 

 

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

Loss (before interest)

1,400

Loss transferred to-

 

Interest on X’s Loan

2,400

X’s Capital A/c

(5,000 × 2/5)

2,000

 

Interest on Y’s Loan

1,200

Y’s Capital A/c

(5,000 × 3/5)

3,000

5,000

 

 

 

 

 

5,000

 

5,000

 

 

 

 



 

Page No 2.83:

Question 9:

Bat and Ball are partners sharing the profits in the ratio of 2 : 3 with capitals of  ` 1,20,000 and  ` 60,000 respectively. On 1st October, 2019, Bat and Ball gave loans of  ` 2,40,000 and  ` 1,20,000 respectively to the firm. Bat had allowed the firm to use his property for business for a monthly rent of  ` 5,000. The loss for the year ended 31st March, 2020 before rent and interest amounted to  ` 9,000. Show distribution of profit/loss.

Answer:

Profit and Loss Account

for the year ended March 31, 2020

Dr.

 

 

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

Loss (before interest)

9,000

 

 

Rent (5,000×12)

60,000

Loss transferred to:

 

 

Interest on Bat’s loan

7,200

Bat’s Capital A/c

31,920

 

Interest on Ball’s loan

3,600

Ball’s Capital A/c

47,880

79,800

 

79,800

 

79,800

 

 

 

 

Working Notes:
WN 1 Interest on Partner’s Loan 

Interst on Bat' s loan=2,40,000×6/100×6/12=72,000

Interst on Ball' s loan=1,20,000×6/100×6/12=36,000

 

WN 2 Distribution of Loss to the Partners 

Loss after Interest on Partners’ Loan = 9,000 + 60,000 + 7,200 + 3,600 = ` 19,800
Bat's Share of Loss=79,800×25=
` 31,920Ball's Share of Loss=79,800×35=` 47,880

 



Page No 2.83:

Question 10;

Akhil and Bimal are partners sharing profits in the ratio of 3 :2. Akhil gave loan to the firm of `1,00,000 on 1st October, 2020. On the same date, the firm gave loan to Bimal of  `1,00 000. They do not have an agreement as to interest.

Akhil had also given his personal property for firm’s  godown at a monthly rent of `5,000.

Firm earns profit of `1,03,000 (before above adjustments) for the year ended 31st March, 2020. Show the distribution of profit for the year.

 

Answer;

Profit and loss account year ended 31 March

 

Particulars

`

Particulars

`

To interest on loan (Akhil)

1,00,000×6/100×6/12

To Rent (Akhil)

5,000×12

To Balance C/d

3,000

 

 

60,000

40,000

By net profit b/d

1,03,000

 

1,03,000

 

1,03,000

 

Profit and loss appropriation account year ended 31 March

 

Particulars

`

Particulars

`

To Profit transferred

Akhil -40,000×3/5

Bimal-40,000×3/5

 

24,000

16,000

By  Balance b/d

40,000

 

40,000

 

40,000

 

 

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

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