12th Ts grewal 2021-22 Question 66 to 70 Accounting for partnership firm- fundamentals

Page No 2.93

Question 66:

Mohan, Vijay and Anil are partners, the balances of their Capital Accounts being ` 30,000, ` 25,000 and ` 20,000 respectively. In arriving at these amounts profit for the year ended 31st March, 2021, ` 24,000 had already been credited to partners in the proportion in which they shared profits. Their drawings were ` 5,000 (Mohan), ` 4,000 (Vijay) and `3,000 (Anil) during the year. Subsequently, the following omissions were noticed and it was decided to rectify the errors:
(a) Interest on capital @ 10% p.a.
(b) Interest on drawings: Mohan ` 250, Vijay ` 200 and Anil ` 150.
Make necessary corrections through a Journal entry and show your workings clearly.

Answer:

	Journal
Date	Particulars		L. F.	Debit Amount ( `)	Credit Amount ( `)
2020 March 31	Anil’s Capital A/c	Dr.		550
	To Mohan’s Capital A/c				550
	(Interest on capital and interest on drawings was omitted, now adjusted)

Working Notes:

WN 1 Calculation of Capital at the beginning

Particulars	Mohan	Vijay	Anil	Total
Capital at the end	30,000	25,000	20,000	75,000
Add: Drawings	5,000	4,000	3,000	12,000
Less: Profit (1:1:1)	(8,000)	(8,000)	(8,000)	(24,000)
Capital in the beginning	27,000	21,000	15,000	63,000

WN 2 Calculation of Interest on Capital

Interest on Mohan’s capital=27,000×10/100=2,700

Interest on Vijay’s capital=21,000×10/100=2,100

Interest on Anil’s capital=15,000×10/100=1,500

WN 3

Statement Showing Adjustment
	Mohan	Vijay	Anil	Total
Interest on Capital to be credited	2,700	2,100	1,500	6,300
Less: Interest on Drawings	(250)	(200)	(150)	(600)
Right Distribution of ` 5,700	2,450	1,900	1,350	5,700
Wrong Distribution of ` 5,700 (1 : 1 : 1)	(1,900)	(1,900)	(1,900)	(5,700)
Net Effect	550	Nil	(550)	NIL

WN 4 Calculation of Final Profit Share of Partners

Total Corrected Profit Available for Distribution = Profit - Interest on Capital + Interest on Drawings

= 24,000 – 6,300 + 600 = ` 18,300

Corrected profti of Mohan,Vijay, Anil each =18,300×1/3=6,100

Page No 2.94

Question 67:

Mudit, Sudhir and Uday are partners in a firm sharing profits in the ratio of 3 : 1 : 1. Their fixed capital balances are ` 4,00,000, ` 1,60,000 and ` 1,20,000 respectively. Net profit for the year ended 31st March, 2018 distributed amongst the partners was ` 1,00,000, without taking into account the following adjustments:
(a) Interest on capitals @ 2.5% p.a.;
(b) Salary to Mudit ` 18,000 p.a. and commission to Uday ` 12,000.
(c) Mudit was allowed a commission of 6% of divisible profit after charging such commission.
Pass a rectifying Journal entry in the books of the firm. Show workings clearly.

(CBSE Sample Paper 2019)

Answer:

In the books of Mudit, Sudhir and Uday Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
March 31	Sudhir’s Current A/c	Dr.		6,000
	To Mudit’s Current A/c				1,000
	To Uday’s Current A/c				5,000
	(Being adjustment entry passed for rectification of errors)

Working Notes:

Table Showing Adjustment
Particulars	Mudit’s Current A/c		Sudhir’s Current A/c		Uday’s Current A/c		Firm
	Dr.( `)	Cr.( `)	Dr.( `)	Cr.( `)	Dr.( `)	Cr.( `)	Dr.( `)	Cr.( `)
Profits wrongly Distributed (Dr.)	60,000		20,000		20,000			1,00,000
Interest on Capital to be
Provided (Cr.)		10,000		4,000		3,000	17,000
Salary to be provided (Cr.)		18,000					18,000
Commission to be provided (Cr.)		3,000				12,000	15,000
Profit correctly distributed (Cr.)		30,000		10,000		10,000	50,000
Balance to be adjusted	1,000(Cr.)		6,000(Dr.)		5,000(Cr.)		NIL

Divisible Profits	=	Profits before appropriation – (Interest on Capital + Salary + Uday’s Commission)
	=	` 1,00,000 – (17,000 + 18,000 + 12,000) = ` 53,000
Mudit’s Commission	=	(Divisible Profit × Rate/ 100 + Rate)
	=	` (53,000 × 6/106) = ` 3,000

Page No 2.94

Question 68:

Piya and Bina are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following was the Balance Sheet of the firm as on 31st March, 2016:

Liabilities		`	Assets	`
Capitals:			Sundry Assets	1,20,000
Piya	80,000
Bina	40,000	1,20,000
		1,20,000		1,20,000

The profits ` 30,000 for the year ended 31st March, 2016 were divided between the partners without allowing interest on capital @ 12% p.a. salary to Piya @ `1,000 per month. During the year Piya withdrew `8,000 and Bina withdrew `4,000. Showing your working notes clearly, pass the necessary rectifying entry.

(Delhi 2017C)

Answer:

Journal
Particular		L.F.	Debit Amount ( `)	Credit Amount ( `)
Bina’s Capital A/c	Dr.		5,856
To Piya’s Capital A/c				5,856
(Adjustment made)

Particular	Piya	Bina	Total
Interest on Capital @ 12% p.a.	8,400	3,840	(12,240)
Salary	12,000	–	(12,000)
Profit (30,000 – 12,240 –12,000)	3,456	2,304	5,760
Right Share	23,856	6,144	(30,000)
Wrong Share	(18,000)	(12,000)	30,000
Net Effect	5,856 (Cr.)	5,856 (Dr.)	Nil

Working Notes:

Particular	Piya	Bina
Closing Capitals	80,000	40,000
Add: Drawings	8,000	4,000
Less: Profit Share	18,000	12,000
Opening Capital	70,000	32,000

Page No 2.94

Question 69;

Naveen, Qadir and Rajesh were partners doing an electronic goods business in Uttarakhand. After the accounts of partnership were drawn up and closed, it was discovered that interest on capital has been allowed to partners @ 6% p.a. for the years ending 31st March,2017 and 2018, although there is no provision for interest on capital in the Partnership Deed. On the other hand, Naveen and Qadir were entitled to a salary of `3,500 and `4,000 per quarter respectively, which has not been taken into consideration. Their fixed capitals were `4,00,000, `3,60,000 and `2,40,000 respectively. During the last two years they had shared the profits and losses as follows:

Year Ended	Ratio
31st March,2017	3:2:1
31stMarch,2018	5:3:2

Pass necessary adjusting entry for the above adjustments in the books of the firm on 1st April, 2018. Show your workings clearly.

(CBSE 2019)

Answer;

Date	Particulars						L.F.	Dr. `			Cr. `
31 March	Rajesh’s current A/c To Naveen ’s current A/c To Qadir’s current A/c (Being omission of salary , wrong interest on capital credited , now profit corrected)					Dr.		17,800			10,000 7,800
	Total							17,800			17,800
Statement showing Adjustments
Particulars		Naveen		Qadir			Rajesh			FIRM
		Dr.	Cr.	Dr.	Cr.		Dr.		Cr.	Dr.		Cr.
1^st Year Interest on capital Salary omitted Profit adjusted 60,000-30,000(3:2:1) 2^nd Year Interest on capital Salary omitted Profit adjusted 60,000-30,000(5:3:2)		24,000 24,000	14,000 15,000 14,000 15,000	21,600 21,600	16,000 10,000 16,000 9,000		14,400 14,400		5,000	30,000 30,000 30,000 30,000		60,000 60,000
Total		48,000	58,000	43,200	51,000		28,800		11,000	1,20,000		1,20,000
Net effect			10,000		7,800		17,800

Page No 2.94

Question 70:

Mannu and Shristhi are partners in a firm sharing profit in the ratio of 3 : 2. Following information is of the firm as on 31st March 2021:


Liabilities		`	Assets		`
Mannu’s Capital	3,00,000		Drawings:
Shristhi’s Capital	1,00,000	4,00,000	Mannu	40,000
			Shristhi	20,000	60,000
			Other Assets		3,40,000
		4,00,000			4,00,000

Profit for the year ended 31st March, 2021 was ` 50,000 which was divided in the agreed ratio, but interest @ 5% p.a. on capital and @ 6% p.a. on drawings was inadvertently omitted. Adjust interest on drawings on an average basis for 6 months. Give the adjustment entry.

Answer:

Adjusting Journal Entry

Date	Particular		L.F	Debit Amount ( `)	Credit Amount ( `)
2021 Mar.31	Shrishti's Capital A/c	Dr.		2,880
	To Mannu's Capital A/c				2,880
	(Adjustment of profit made)

Adjustment of Profit

	Mannu’s	Shrishti		Total
Interest on Capital	15,000	5,000	=	20,000
Less: Interest on Drawings	(1,200)	(600)	=	(1800)
Right distribution of ` 18,200	13,800	4,400	=	18,200
Less: Wrong distribution of ` 18,200 (3 : 2)	(10,920)	(7,280)	=	(18,200)
Adjusted Profit	2,880	(2,880)	=	NIL