12th | Ts grewal 2022-2023 Question 46 to 50 | Fundamental Accounting for Partnership firm

Double Entry Book Keeping Ts Grewal Vol. 1 2019 Solutions for Class 12 Commerce ACCOUNTANCY Chapter 2 - Accounting For Partnership Firms Fundamentals

Question 46:


A and B are partners sharing profits and losses in the ratio of 3 : 1. On 1st April, 2021, their capitals were: A  ` 50,000 and B  ` 30,000. During the year ended 31st March, 2022 they earned a net profit of  ` 50,000. The terms of partnership are:
(a) Interest on capital is to allowed @ 6% p.a.
(b) A will get a commission @ 2% on turnover.
(c) B will get a salary of  ` 500 per month.
(d) B will get commission of 5% on profits after deduction of all expenses including such commission.
Partners' drawings for the year were: A  ` 8,000 and B  ` 6,000. Turnover for the year was  ` 3,00,000.
After considering the above facts, you are required to prepare Profit and Loss Appropriation Account and Partners' Capital Accounts.

Answer:


Profit and Loss Appropriation Account

for the year ended 31st March, 2022

Dr.

 

 

Cr.

Particulars

 ( `)

Particulars

 ( `)

Interest on  Capital:

 

Profit and Loss A/c (Net Profit)

50,000

A’s Capital A/c

3,000

 

 

 

B’s Capital A/c

1,800

4,800

 

 

B’s Salary (500 × 12)

6,000

 

 

Partner’s  Commission                     

 

 

 

A’s Capital A/c

6,000

 

 

 

B’s Capital A/c

1,581

7,581

 

 

Profit transferred to:

 

 

 

A’s Capital A/c

23,714

 

 

 

B’s Capital A/c

7,905

31,619

 

 

 

50,000

 

50,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

Cr.

Particulars

A
( `)

B
( `)

Particulars

A
( `)

B
( `)

Drawings A/c          

8,000

6,000

Balance b/d

50,000

30,000

 

 

 

Interest on Capital A/c

3,000

1,800

 

 

 

Commission A/c

6,000

1,581

 

 

 

Salary A/c

 

6,000

Balance c/d

74,714

41,286

P/L Appropriation A/c   

23,714

7,905

 

82,714

47,286

 

82,714

47,286

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

Interest on A’s capital=50,000×6/100=3000

Interest on B’s capital=30,000×6/100=1,800

WN 2 Calculation of Commission to Partners

A’s commission = 2% on turnover

=3,00,000×2/100=6,000

Commission to B = 5% on Profits after all Expense including such Commission

Profits after all expense = 50,000 -` 4,800 -` 6,000 -` 6,000 = ` 33,200

B’s commission= Profit after all expenses×Rate of commission/100+Rate

33.200×5/105=1,581 (approx.)

WN 3 Calculation of Profit Share of each Partner

Profit available for Distribution = 50,000 -` 4,800- ` 6,000 -`7,581 = ` 31,619

Profit sharing ratio = 3 : 1

A’s profit share= 31,619×3/4=23,716

B’s profit share= 31,619×1/4=7,905

 

Question 47:


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

 ( `)

Particulars

 ( `)

 

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

 ( `)

Credit

 ( `)

 

 

 

 

 

 

 

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

 

Question 48:


Amit, Binita and Charu are three partners. On 1st April, 2021, 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, 2022 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, 2022

Dr.

 

 

Cr.

Particulars

 ( `)

Particulars

 ( `)

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

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

Interest on Amit=1,00,000×5÷100=5,000

Interest on Binita=2,00,000×5÷100=10,000

Interest on Charu=3,00,000×5÷100=15,000

 

WN 2 Calculation of Commission to Binita

Commission to Binita = 5% on Net Profits after Commission
Commission to Binita=Net Profit ×Rate100+Rate=5,00,000×5÷105=` 23,810

 

WN 3 Calculation of Amount to be transferred to General Reserve

Amount for General Reserve = 10% of Profit

=5,00,000×10÷100=` 50,000

WN 4 Calculation of Profit Share of each Partner

Profit available for Distribution = 5,00,000 - 30,000 - 1,20,000 - 23,810 - 50,000

= ` 2,76,190
Profit share of Amit, Binita and Charu each = 2,76,190×1÷ 3= ` 92,063

 

Question 49: Yadu, Vidu and Radhu were partners in a firm sharing profits in the ratio of 4:3:3. Their fixed capitals


1st April, 2018 were ` 9,00,000, `5,00,000 and ` 4,00,000 respectively. On 1st November, 2018, Yadu gave a loan of `80,000 to the firm, as per the partnership agreement.

(i) The partners were entitled to an interest on capital @ 6% p.a.

(ii)Interest on partners' drawings was to be charged@ 8% p.a.

The firm earned profit of `2,53,000 (after interest on Yadu's Loan) during the year 2018-19. Partners

drawings for the year amounted to:

Yadu- `80,000, Vidu- `70,000 and Radhu- `50,000.

Prepare Profit and Loss Appropriation Account for the year ending 31st March, 2019.

 

Answer:


 

Profit and Loss Appropriation Account

Dr.

 

 

 

Cr.

Particulars

`

Particulars

`

Interest on Capital:

 

Profit and Loss A/c (Net Profit)

2,53,000

Yadu’s Capital A/c

Vidu’s Capital A/c

54,000

30,000

 

Interest on Capital:

 

Radhu’s Capital A/c

24,000

1,08,000

Yadu’s Capital A/c

Vidu’s Capital A/c

3.200

2,800

 

 

 

 

Radhu’s Capital A/c

2,000

8,000 

Profit transferred to:

 

 

 

 

Yadu’s Capital A/c

Vidu’s Capital A/c

61,200

45,900

 

 

Radhu’s Capital A/c

48,900

1,53,000

 

 

2,61,000

2,61,000

 

 

 

Working notes:

WN1 Calculation of Interest on Capital

Yadu =9,00,000×6/100=54,000

Vidu=5,00,000×6/100=30,000

Radhu =4,00,000×6/100=24,000

 

WN2 Calculation of Interest on Drawings

Yadu =80,000×8/100×6/12=3,200

Vidu=70,000×8/100×6/12=2,800

Radhu =50,000×8/100×6/12=2,000

 

WN3 Distribution of profit (4:3:3)

Yadu =1,53,000×4/10=61,200

Vidu =1,53,000×3/10=45,900

Radhu =1,53,000×3/10=45,900

 

Question 50:


Sajal and Kajal are partners sharing profits and losses in the ratio of 2 : 1. On 1st April, 2021 their Capitals were: Sajal –  ` 50,000 and Kajal –  ` 40,000.
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  ` 30,000.
(c) Interest on partners' drawings @ 6% p.a. Drawings: Sajal  ` 10,000 and Kajal  ` 8,000.
(d) 10% of the divisible profit is to be transferred to Reserve.
Net profit for the year ended 31st March, 2022 is  ` 68,460.
Note: Net profit means net profit after debit of interest on loan by the partner.

Answer:


Profit and Loss Account
for the year ended 31st March, 2022

Dr.

 

 

Cr.

Particulars

 ( `)

Particulars

 ( `)

Interest on Kajal’s loan@ 6% p.a.

1,800

Profit                                 

70,260

Profit transferred to P/L Appropriation A/c

68,460

 

 

 

 

 

 

 

70,260

 

70,260

 

 

 

 

 

Profit and Loss Appropriation Account
for the year ended 31st  March,  2022

Dr.

 

 

Cr.

Particulars

 ( `)

Particulars

 ( `)

Interest on Capital A/c:

 

Profit and Loss A/c

68,460

Sajal’s Capital A/c

2,500

 

 

 

Kajal’s Capital A/c

2,000

4,500

Interest on Drawings A/c:      

 

 

 

Sajal’s Capital A/c

300

 

Reserve

6,450

Kajal’s Capital A/c

240

540

Profit transferred to:

 

 

 

Sajal’s Capital A/c

  38,700

 

 

 

Kajal’s Capital A/c

19,350

58,050

 

 

 

69,000

 

69,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Sajal
( `)

Kajal
( `)

Particulars

Sajal
( `)

Kajal
( `)

Drawings A/c

10,000

8,000

Balance b/d

50,000

40,000

Interest on Drawings A/c

300

240

Interest on Capital A/c

2,500

2,000

 

 

 

P&L Appropriation A/c

38,700

19,350

Balance c/d

80,900

53,110

 

 

 

 

91,200

61,350

 

91,200

61,350

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

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

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

 

WN 2 Calculation of Interest on Drawings

Interest on Sajal’s Drawing=10,000×6/100×6/12=300

Interest on Kajal’s Drawing=8,000×6/100×6/12=240

 

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

= 68,460 + 540 - 4,500 = ` 64,500

Amount of reserve =64,500×10/100=6,450

 

WN 4 Calculation of Profit Share of each Partner

Profit available for Distribution = 68,460 + 540 – (` 4,500+ ` 6,450) = ` 58,050

Profit sharing ratio = 2 : 1

Sajal’s profit share = 58,050×2/3=38700

kajal’s profit share = 58,050×1/3=19350