* 1.86 Double Entry Book: Keeping—CBSE XII ey Partnership Deed “ANIn the absence of Partnership Deed, state the provisions of the Partnership Act, 1932 relating to: (a) Salaries of partners, (b) Interest on partners’ capitals, (©) Interest on loan by partner, (d)_ Division of profit, (e) Interest on partners’ drawings, (f) Interest on Loan given to partners? [Ans.: (a) Not allowed; (b) Not allowed; (c) 6% p.a,; (d) Equal; (e) Not charged; (f) Not charged 2. Mahesh, Ramesh and Suresh are partners in a firm. They do not have a Partnership Deed. At the end of the first year of the business, they faced the following problems: {a) Mahesh wants that interest on capital should be allowed to the partners but Ramesh and Suresh do not agree. (b) Ramesh wants that the partners should be allowed to draw salary but Mahesh and Suresh do not agree, (©) Mahesh and Ramesh want that Suresh should pay interest on loan given to him by the firm but Suresh does not agree. (d) Mahesh and Ramesh having contributed larger amounts of capital, desire that the profits should be distributed in the ratio of their capital contribution but Suresh does not agree. State how will these disputes be settled. [Ans.: (a) Mahesh’s claim is not accepted, (b) Ramesh's claim is not accepted, (c) Mahesh and Ramesh’s claim is not accepted; Suresh will not pay interest in the absence of agreement, and (d) Profits or losses would be distributed among the partners equally. The claim made by Mahesh and Ramesh is not accepted) > 3. Following differences have arisen among P, Qand R. State who is correct in each case: {a) Pused % 50,000 belonging to the firm and earned a profit of € 5,000. Q and R want the amount to be given to the firm. (b) Qused % 10,000 belonging to the firm and incurred a loss of € 1,000. He wants the firm to bear the loss. (©) Pand Q want to purchase goods from Star Ltd,, R does not agree. (d) Qand R want to admit Was partner, P does not agree. (©) Rhad given loan of € 2,00,000 to the firm and demands interest @ 10% p.a. Pand Q do not want to pay the interest. [Ans.: (a) P must pay— 55,000; (b) Q must pay— 10,000; (c) Goods may be bought from Star Ltd; (d) W cannot be admitted; (e) R will get interest @ 6% p.a.] 4. Barun, Tarun and Shivam are partners in a firm and do not have a Partnership Deed, Barun introduced further capital of € 5,00,000 on 1st October, 2022. Whereas Shivam took loan of € 50,000 from the firm on 1st October, 2022. Disputes have arisen among them on the following: (a) Barun demands interest @ 10% p.a. on & 5,00,000 being his extra capital. (b) Tarun desires that his son Deep should be admitted as partner and he will give him half of his share. Barun and Shivam do not agree. (0) Barun and Tarun are of the view that Shivam should be charged interest on loan from the firm at the lending rate of the banks, which is 12% p.a. (d) Tanun has withdrawn T 50,000 from the firm for his personal use. Barun and Shivam are of the view that Tarun should be charged interest @ 10% p.a. Give solution to each issue of dispute. [Ans.: In the absence of Partnership Deed, the provisions of Indian Partnership Act, 1932 will apply: (a) Interest will not be paid on extra capital introduced, (b) Deep cannot be admitted as Barun and Shivam don't agree, (c) No interest will be charged from Shivam as rate of interest was not agreed, (d) Interest on drawings will not be charged from Tarun]Chapter 1 - Accounting for Partnership Firms—Fundamentals 1.87 5, Harshad and Dhiman are in partnership since 1st April, 2022. No partnership agreement was made. They > ontributed © 4,00,000 and 1,00,000 respectively as capitals. In addition, Harshad had given loan of $1,00,000 to the firm on Tst October, 2022. Due to long illness, Harshad could not participate in business activities from 1st August, 2022 to 30th September, 2022. Profit for the year ended 31st March, 2023 was £1 80,000. Dispute has arisen between Harshad and Dhiman, Harshad Claims: () He should be given interest @ 10% per annum on capital and loan; {ip Profit should be distributed inthe ratio of capita. Dhiman Claims: {j Profts should be distributed equally, {i) He should be allowed & 2,000 pum. as remuneration for the period he managed the business in the absence of Harshad; (ii) Interest on Capital and loan should be allowed @ 6% pa. Youare required to settle the dispute between Harshadand Dhiman. Also prepare Profit &Loss Appropriation ‘Account. (NCERT, Modified) {Ans.: Harshad and Dhiman each gets 88,500 as profit and Harshad gets & 3,000 as Interest on Loan.) [Hints:Harshad's Claim: (a) Harshad is not entitled to any interest on capital, but he is entitled to interest on his loan @ 6% pax (b) Profits will be distributed equally as per Partnership Act, 1932. Dhiman’s Claim: (a) His claim is right that profits should be shared equally; (b) No remuneration will be allowed to Dhiman; (©) Interest on capital will not be allowed] Interest on Loan by Partner to the Firm X and Y ate partners sharing profits and losses in the ratio of 2 : 3 with capitals of € 2,00,000 and %3,00,000 respectively. On Ist October, 2022, Xand Y gave loans of € 80,000 and % 40,000 respectively to the firm. Show distribution of profits/losses for the year ended 31st March, 2023 in each of the following alternative cases: Case 1. If the profit before interest for the year amounted to 21,000. Case 2. If the profit before interest for the year amounted to % 3,000. Case 3. If the profit before interest for ‘the year amounted to % 5,000. Case 4, If the loss before interest for the year amounted to & 1,400. [Ans.: Interest on Loan by X% 2,400; Interest on Loan by Y% 1,200; Case 1. Profit: X% 6,960; ¥ % 10,440; Case 2. Loss: ‘X% 240; YX 360; Case 3, Profit: X% 560; Y 840; Case 4. Loss: X% 2,000; Y % 3,000) [Hints Interest on Loan by partner is a charge against profit) °7. ‘Sta and Geeta are partners in a firm sharing profits in the ratio of 3 : 2. They had given loan to the firm of 30,000 in their profit-sharing ratio on 1st October, 2022. The Partnership Deed ssilent 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. {ans.: Interest payable to Sita—8 30,000 x 3/5 x 6/100 x 6/12=% 540; Interest payable to Geeta— 30,000 x 2/5 x 6/100 x 6/12 =% 360.) (Hint: According othe Indian Partnership Act, 1932, interest @6% pa. ispayable on theamountofloan given by partners. In the present case, interest will be payable for 6 months, ie., from 1st October, 2022 to 31st March, 2023] 8. 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, 2022, 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. Loss for the year ended 31st March, 2023 before rent and interest amounted to € 9,000. Show distribution of Profit/loss, [Ans.: Share of Loss: Bat— 31,920; Ball— 47,880.) (Hint: interest on Loan by partner and Rent are charges against profit]1.88 Double Entry Book Keeping—CBSE XIl 3:2: 1. Sunil had given loan to firm o, 9. Akhil Sunil and Parvesh are partners sharing profits in the ratio of t was paid by cheque yp a Ist November, 2022 of & 4,00,000. Interest payable was agreed @ 12% p-2. Inter to February, 2023 on 1st March, 2023 and balance was yet to be paid. rie irtner. Pass the Journal entries for interest on loan by pat unil up to February, 2023—R 16,009 a st on Loan by St f (Ans. Interest eat transfered to Profit & Loss A/c—R 20,009) i artner Interest on Loan to the Firm by Partner and Loan by the Firm to P: in the ratio of 3:2. Akhil gave loan to the firm of 1,00,000 on 10. Akhil and Bimal are partners sharing profit 1 of Z 1,00,000. They do not have an Ist October, 2022. On the same date, the firm gave loan to Bimal agreement as to interest. j f 5,000. Akhil had also given his personal property for firm’s godown at a monthly rent of varch 2005. Sh rch, 2023. Firm earns profit of € 1,03,000 (before above adjustments) for the year ended 31st Marc! 1OW the distribution of profit for the year. ; ee eer as. € 40,000 1,03,000 ~¥ 3,000) interest on Loan by Akhil) —X 60,000 (ent) willbe “distributed in the ratio of 3:2. AKhil—X 24,000; Bimal—X 16,000} [Hints In the absence of agreement, Akhil will get interest @ 6% p.a. on loan given by him. Interest will not be charged on loan to Bimal by the firm. Also, rent will be paid to Akhil as per the agreement] irmal and Pawan are partners sharing profs in the ratio of 3: 2. The firm had given loan to Pawan of 5,00,000 on Ist Apri, 2022. Interest was to be charged @ 10% pa. The firm took loan of 2,00,000 from Nirmal on Ist October, 2022. Before giving effect to the above, the firm incurred a loss of € 10,000 for the year ended 31st March, 2023. Determine the amount to be transferred to Profit & Loss Appropriation Account. [Ans.: Amount of Proft transferred to Profit & Loss Appropriation A/c—R 34,000} 12. Ankit, Bhanu and Charu are partners in a firm sharing profits and losses equally with capital of € 250,000 ~~ each. On Ist October, 2022, Ankit and Bhanu gave loans of € 2,50,000 each to the firm whereas Charu took a loan of &1,00,000 from the firm on the same date. It was agreed among the partners that Charu will be charged Interest @ 6% p.a. Interest on loan from partners was paid on 10th April, 2023. The firm closes its books on 31st March each year. Pass the Journal entries in the books of the firm for the year ended 31st March, 2023. (Ans. Interest credited to Loan Accounts of Ankit and Bhanu—X 7,500 each; Interest debited to Charu's Capital Account— 3,000] Atul, Jetha and Tarak are partners sharing profits equally. Jetha was given loan by the firm on 1st July, 2022 of €6,00,000. Books are closed on 31st March. What Journal entries will be passed if (@) Rate of interest is not agreed; and (b) Rate of interest to be charged is agreed @ 10% p.a? Nu. [Ans.: (a) Interest will not be charged. Hence, no Journal entry will be passed; / (6) nterest on Loan to Jetha (up to 31st March, 2023)—X 45,000 "4. Parul Paresh and Rahul are partners in a firm. Firm gave loan to Rahul on 1st February, 2022 of &6,00,000. s paid by cheque up to February, 2023 by Rahul im. Interest was agreed to be charged @ 6% pa. Interest wa on Sth March, 2023 and balance was yet to be paid by hit Pass the Journal entries for interest on loan to partner, (Ans: interest on Loan to Rahul (for February, 2023)— 3,000; Interest transferred to Profit & Loss A/c (up to 31st March, 2023)—X 6,000) 15. Vinod and Mohan are partners. Vinod's Capital is € 1,00,000 and Mohan’s Capital is & 60,000. Interest on capital is payable @ 6% pa. Vinod is to get salary of & 3,000 Per month. Net Profit for the year is % 80,000. Prepare Profit & Loss Appropriation Account, {Ans.: Share of Profit: Vinod—R 17,200; Mohan—% 17,200)Chapter 1. Accounting for Partnership Firms—Fundamentals 1.89 Zare partners in a firm sharing profits in th ee : 46, %¥ and in the ratio of 2: 2: 1. Fixed capitals of the partners were: x € 500,000 ¥ 5,00,000 and Z & 2,50,000 respectively. The Partnership Deed provides that interest on capital i tobe allowed @ 10% pa. Zs to be allowed salary of € 2,000 per month. Profit of the firm for the year ended 31st March, 2023 after debiting Z's salary was & 400,000, Prepare Profit & Loss Appropriation Account. {Ans.: Divisible Profit—X 2,75,000,] 17, Xand Yare partners sharing profits in the ratio of 3:2 with capitals of € 8,00,000 and ¥ 6,00,000 respectively. Interest on capital is agreed @ 5% pa. Y is to be allowed an annual salary of € 60,000 which has not been withdrawn. Profit for the year ended 31st March, 2023 before interest on capital but after charging y's salary was € 2,40,000. provision of 5% of the net profit is to be made in respect of commission to the Manager. Prepare Profit & Loss Appropriation Account showing the allocation of profits. (Ans.: Provision for Manager's Commission—€ 15,000 (i.e, 5% of 3,00,000), Share of Profit: XX 93,000; Y—% 62,000] 1. Atul and Mithun are partners sharing profits in the ratio of 3: 2. Balances as on 1st April, 2022 were as follows: Capital Accounts (Fixed): Atul—¥ 5,00,000 and Mithun—& 6,00,000. Loan Accounts: Atul—¥ 3,00,000 (Cr) and Mithun—& 2,00,000 (Dr) twas agreed to allow and charge interest @ 8% pa. Partnership Deed provided to allow interest on capital @ 10% pa. Interest on Drawings was charged ® 5,000 each. Profit before giving effect to above was € 2,28,000 for the year ended 31st March, 2023. Prepare Profit & Loss Appropriation Account. Ans. Share of Profit: Atul— 72,000; and Mithun— 48,000.] 419, Reema and Seema are partners sharing profits equally. The Partnership Deed provides that both Reema and Seema will get monthly salary of € 15,000 each, Interest on Capital will be allowed @ 5% pa. and Interest on Drawings will be charged @ 10% pa. Their capitals were & 5,00,000 each and drawings during the year were € 60,000 each. The firm incurred net loss of & 1,00,000 during the year ended 31st March, 2023. Prepare Profit & Loss Appropriation Account for the year ended 31st March, 2023. [Ans.: Loss—X 94,000; Reema's Share— 47,000; Seema's Share— 47,000.] 20. Bhanu and Partap are partners sharing profits equally. Their fixed capitals as on Ist April, 2022 were % 8,00,000 and 10,00,000 respectively. Their drawings during the year were & 50,000 and & 1,00,000 respectively. Interest on Capital isa charge and is to be allowed @ 10% p.. and interest on drawings is to be charged @ 15% p.a. Net Profit for the year ended 31st March, 2023 before giving effect to the above) was %1,20,000. Prepare Profit & Loss Appropriation Account. tAns.: Loss—& 48,750; Dr. Bhanu's Current A/c and Partap’s Current Account by & 24,375 each.) PARTNERS’ CAPITAL ACCOUNTS Fixed Capital 21. Amitand Sumitenteredinto partnershipon 1st April, 2022and invested 1,50,000 and%2,50,000respectively as capitals. The Partnership Deed provided for interest on capitals @ 10% p.a. It also provided that Capital Accounts shall be maintained following Fixed Capital Accounts Method. The firm earned net profit of % 1,00,000 for the year ended 31st March, 2023. Pass the Journal entry for interest on capital. fAns.: Dr. Profit & Loss Appropriation A/c by 40,000; Cr. Amit’s Current A/c by ® 15,000 and Sumit’s Current A/c by & 25,000.)1.90 Double Entry Book Keeping—CBSE XII 22. Kamal and Kapil are partners having fixed capitals of % 500,000 each as on 31st March, 2022. Kamaj introduced further captial of € 1,00,000 on 1st October, 2022 whereas Kapil withdrew 1,00,000 on st October, 2022 out of capital. Interest on capital is to be allowed @ 10% pa. The firm earned net Profit of € 6,00,000 for the year ended 31st March, 2023. Pass the Journal entry for i i Profit & Loss Appropriation Account. y for interest on capital and peepite ilies uanaeeliner pss nig Cr. Kamal's Current A/c by & 55,000 and Kapil’s Current A/c by & 45,000; Share of Profit: Kamal—X 2,50,000 and Kapil—R 2,50,000} (Hint: Profit-sharing ratio between Kamal and Kapil is not given. Hence, they will share profit equally] 23. Simran and Reema are partners sharing profits in the ratio of 3 : 2. Their capitals as on 1st April, 2022 were & 2,00,000 each whereas Current Accounts had balances of % 50,000 and @ 25,000 respectively, Interest on capital is to be allowed @ 5% p.a. Net profit of the firm for the year ended 31st March, 2023 was % 3,00,000. Pass the Journal entries for interest on capital and distribution of profit. Also prepare Profit & Loss Appropriation Account for the year. [Ans.:(i) Dr. Profit & Loss Appropriation A/c by & 20,000; Cr. Simran’s Current A/c by ® 10,000 and Reema’s Current A/c by & 10,000; (ii)_Dr. Profit & Loss Appropriation A/c by & 2,80,000; Gr. Simran‘s Current A/c by 1,68,000 and Reema’s Current A/c by 1,12,000.] [Hint: Interest will not be allowed on Current Account balances] Fluctuating Ca) 24, Anita and Ankita are partners sharing profits equally. Their capitals, maintained following Fluctuating Capital Accounts Method, as on 1st April, 2022 were & 5,00,000 and % 4,00,000 respectively. Partnership Deed provided to allow interest on capital @ 10% p.a. The firm earned net profit of € 2,00,000 for the year ended 31st March, 2023. Pass the Journal entry for interest on capital. [Ans.: Dr. Profit & Loss Appropriation A/c by 90,000; Anita's Capital A/c by 8 50,000 and Ankita’s Capital A/c by € 40,000] 25. Ashish and Aakash are partners sharing profits in the ratio of 3 :2. Their Capital Accounts had credit balances of % 5,00,000 and F 6,00,000 respectively as on 31st March, 2023 after debit of drawings during the year of % 1,50,000 and ¥ 1,00,000 respectively. Net profit for the year ended 31st March, 2023 was € 5,00,000. Interest on capital is to be allowed @ 10% pa. Pass the Journal entry for interest on capital and prepare Profit & Loss Appropriation Account. Ans: (i) Dr. Profit & Loss Appropriation A/c by 1,35,000; Gr. Ashish’s Capital A/c by & 65,000 and Aakash’s Capital A/c by & 70,000; (ii) Share of Profit: Ashish—R 2, 19,000 and Aakash—R 1,46,000] [Hint: Interest on capital is allowed on opening balances of capital.] Naresh and Sukesh are partners with capitals of % 3,00,000 each as on 31st March, 2023. Naresh had withdrawn & 50,000 against capital on 1st October, 2022 and ® 1,00,000 drawings against profit. Sukesh also had drawings of & 1,00,000. Interest on capital is to be allowed @ 10% pa. Net profit for the year was € 2,00,000, which is yet to be distributed, Pass the Journal entries for interest on capital and distribution of profit. [Ans.: For Interest on Capital: Dr. Profit & Loss Appropriation A/c by & 82,500; Cr. Naresh’s Capital A/c by & 42,500 & Sukesh’s Capital A/c by % 40,000; For Profit distribution: Dr. Profit & Loss Appropriation A/c by ® 1, 17,500: Gr. Naresh’s Capital A/c by & 58,750 and Sukesh’s Capital A/c by & 58,750~ Chapter 1 Accounting for Partnership Firms—Fundamentals 1.91 2. on 1st Apri, 2013, Jay and Vijay entered into partnership for supplying laboratory equipments to government 7 schools situated in remote and backward areas. They contributed capitals of % 80,000 and & 50,000 respectively and agreed to share the profits in the ratio of 3 : 2. The Partnership Deed provided that interest on capital shal be allowed at 9% per annum, During the year the firm earned a profit of % 7,800. showing your calculations clearly, prepare’ Profit & Loss Appropriation Account ‘of Jay and Vijay for the year ended 31st March, 2014. (Delhi 2015) ' {Ans.: Interest on Capital: Jay—X 4,800; Vijay—X 3,000.] [Hint: Since the amount of net profits less than the total amount of interest on Capital, i. 7,200 (Jay) + %4,500 (Vijay) = 11,700, the net profit has been distributed in the ratio of interest claims of Jay and Vijay, ie. 7,200 :& 4,500 or 8:5.) calculation of Interest on Partners’ Capitals 3s. Aand Bare partners in the ratio of 3 : 2. The firm maintains Fluctuating Capital Accounts and the balance of the same as on 31st March, 2020 amounted to & 1,60,000 and & 1,40,000 for A and B respectively. Their drawings during the year were & 30,000 each, {As per Partnership Deed, interest on capital @ 10% p.a. on opening capitals had been provided to them. Calculate opening capitals of partners given that their profit was € 90,000, Show your workings clearly. (CBSE Sample Paper 2020) {Ans.: Opening Capital: A 1,38,364; BX 1,31,636.] 29, Following is the extract of the Balance Sheet of Neelkant and Mahadev as on 31st March, 2023: BALANCE SHEET as at 31st March, 2023, abilities zg Assets ie Neelkant’s Capital 10,00,000 | Sundry Assets 30,00,000 Mahadev's Capital 10,00,000 Neelkant's Current A/c 1,00,000 Mahadev’ Current A/c 100,000 Profit & Loss A/c (2022-23) 8,00,000 (000 30,00,000 During the year, Mahadev's drawings were 30,000. Profit during the year ended 31st March, 2023 is % 10,00,000. Calculate interest on capital @ 5% p.a. for the year ending 31st March, 2023. (NCERT, Modified) {Ans.: Interest on Capital: Neelkant— 50,000; Mahadev— 50,000.] 30. From the following Balance Sheet of Long and Short, calculate interest on capital @ 8% p.a. for the year ended 31st March, 2023: BALANCE SHEET as at 31st March, 2023 Uabilities Z| Assets z Long's Capital A/c 1,20,000 | Fixed Assets 3,00,000 Shorts Capital A/c 1,40,000 | Other Assets 60,000 General Reserve 1,00,000 3,60,000 During the year, Long withdrew % 40,000 and Short withdrew ® 50,000. Profit for the year was & 1,50,000 ut of which & 1,00,000 was transferred to General Reserve. [Ans.: Interest on Long's Capital 10,800; Interest on Short’s Capital— 13,200] Amit and Bramit started business on 1st April, 2022 with capitals of € 15,00,000 and ® 9,00,000 respectively. On Ist October, 2022, they decided that their capitals should be® 12,00,000 each. Thenecessary adjustments in capitals were made by introducing or withdrawing by cheque. Interest on capital is allowed @ 8% pa. Compute interest on capital for the year ended 31st March, 2023. [Ans.: Interest on Capital: Amit— 1,08,000; Bramit—8 84,000] un a1.92 Double Entry Book Keeping—CBSE Xil pital. They decide to allow interest 32. Moli and Bholi contribute & 20,000 and & 10,000 respectively towards caf fit for the year is & 1,500. Sho, N capital @ 6% p.a. Their respective share of profits is 2 : 3 and prot distribution of profits: Sea (i) When there is no agreement except for interest on capitals; an (i) When there is an agreement that the interest on capital is a charge. eae seareaes a interest ‘on Capital: Moll 1,000; Bholi—X 500; (ii) Loss: Moll 120; Bholl— 180) Salary or Commission to Partners jo of2:22 33. Shiv, Mohan and Gopal are partners sharing profits and losses in the ratio of 2: 2: isi is 1,10,000. commission of 10% on the net profit. Net profit for the year is € 1,10, ce a Determine the amount of commission payable to Shiv. (Ans. Commission payable to Shiv— 11,009) 34, Abha, Bobby and Vineet are partners sharing profits and losses equally. As per Partnership Dee Mine is entitled to commission of 10% on the net profit after charging such commission. Net profit before charging commission is % 2,20,000. z Determine the amount of commission payable to Vineet. [Ans.: Commission payable to Vineet— 20,000) 35. A.B, Cand D are partners in a firm sharing profits in the ratio of 4 The firm earned net profit of 1,80,000 for the year ended 31st March, 2023. As per the Partnership Deed, partners will get commission @ 20% of the profit after charging such commission which they will share as 2: 3: 2:3. You are required to show appropriation of profits among the partners. =e [Ans.: Commission payable to the partners = 20/120 x % 1,80,000 =% 30,000 which will be shared as: AX 6,000; B—¥ 9,000; C—% 6,000 and D—% 9,000, Share of Profits: A—% 60,000; B—¥ 45,000; C—X 30,000 and D—% 15,000} 36. Xand ¥ are partners in a firm. X is entitled to a salary of € 10,000 per month and commission of 10% Of the net profit after partners’ salaries but before charging commission. ¥ is entitled to a salary of 25,000 pa. and commission of 10% of the net profit after charging all commission and partners’ salaries. 'Net profit before providing for partners’ salaries and commission for the year ended 31st March, 2023 was % 4,20,000. Show distribution of profit. (Ans Xs Commission— 27,500; Ys Commission — 22,500; Net Profit—X 2,25,000; Xand Ys Share— 1,12,500each} (Hint: Y's Commission = 10/110 of & 247,500 (ie, & 4,20,000 -€ 1,20,000 (X's Salary) - & 25,000 (Ys Salary) - & 27,500 (X's Commission) 1. Shiv is entitled to Calculation of Interest on Partners’ Drawings, Amount of Drawings and Rate of Interest on Drawings 37. Ram and Mohan, two partners, drew for their personal use & 1,20,000 and & 80,000, interest is chargeable @ 6% pa. on the drawings. What s the amount of interest chargeable from each partner? {Ans.: Interest on Drawings: Ram—R 3,600 and Mohan— 2,400) {Hint: When the dates of drawings are not given, interest on drawings is calculated on the total amount of drawings for average period of 6 months] 38. Brij and Mohan are partners in a firm. They withdrew ® 48,000 and & 36,000 respectively during the year evenly in the middle of every month. According to the Partnership Deed, interest on drawings is to be charged @ 10% pa. Calculate interest on drawings of the partners using the appropriate formula, {Ans.: Interest on Br’s Drawings— 2,400 and interest on Mohan's Drawings— 1,800) 39. Dev withdrew & 10,000 on 15th day of every month Interest on drawings was to be charged @ 12% per annum, Calculate interest on Dev's Drawings. (CBSE 2019) (Ans.: Interest on Drawings—R 7,200] 40. One of the partners in a partnership firm has withdrawn & 9,000 at the end of each quarter, throughout the year. Calculate interest on drawings at the rate of 6% per annum, (CBSE Sample Paper 2018) [Ans.: Interest on Drawings—& 810]a. a7, Chapter 1 - Accounting for Partnership Firms—Fundamentals 1.93 haring profits equally. A ‘Aand Bare partners S) ‘qually. A drew regularly % 4,000 in the beginning of every month for six months ended 30th September, 2022. Calculate interest on drawings @ 5% pa. for a period of six months. : . [Ans.: Interest on Drawings—R 350.) [Hint: Interest on drawings will be charged for average period of 3.5 months on total drawings] . A and B are partners sharing profits equally. A drew regularly € 4,000 at the end of every month for ‘ixmonths ended 30th September, 2022. Calculate interest on drawings @ 5% pa. for a period of six months. oe [Ans.: Interest on Drawings— 250] [Hint: Interest on drawings will be charged for average period of 2.5 months on total drawings.) . Band Care partners sharing profits equally. C regularly withdrew € 5,000 per month in the beginning of the month for six months ended 30th September, 2022. Calculate interest on drawings @ 12% pa. for the year ended 31st March, 2023, [Ans Interest on Drawings—% 2,850] {Hint Interest on drawings will be charged for 9.5 months on total drawings) 1. Calculate interest on drawings of Sanjay @ 10% p.a. for the year ended 31st March, 2023, in each of the following alternative cases: Case 1. Ifhe withdrew ® 7,500 in the beginning of each quarter. Case 2. If he withdrew & 7,500 at the end of each quarter. Case 3. Ifhe withdrew & 7,500 during the middle of each quarter. [Ansa Interest on Drawings: Case 1X 1,875; Case 2—R 1,125; Case 3—R 1,500) ,. The capital accounts of Tisha and Divya showed credit balances of 10,00,000 and % 7,50,000 respectively after taking into account drawings and net profit of % 5,00,000. The drawings of the partners during the year ended 31st March, 2024 were: (i) Tisha withdrew & 25,000 at the end of each quarter. (i) Divya’s drawings were: 31st May, 2023 % 20,000 Ist November, 2023 % 17,500 ‘Ist February, 2024 212,500 Calculate interest on partners’ capitals @ 10% p.a. and interest on partners’ drawings @ 6% pa. for the year ended 31st March, 2024 Ans.: Tisha Divya z z Opening Capital ——_8,50,000 5,50,000 Intereston Capital 85,000 55,000 Intereston Drawings 2,250 —‘1,563] A, Band Care partners. During the year ended 31st March, 2023, each of the partners withdrew & 10,000 regularly. A withdrew in the beginning of the first 6 months of the year, 8 withdrew in the middle of the month for the first 6 months of the year and C withdrew at the end of the month for the first 6 months. Calculate interest on drawings @ 6% pa. for the year ended 31st March, 2023. {Ans.: Interest on Drawings: AX 2,850; BX 2,700 and C—X 2,550] Calculate the amount of Manan's monthly drawings for the year ended 31st March, 2023, in the following alternative cases when Partnership Deed allows interest on drawings @ 10% p. (i) interest on drawings is % 1,950 and he withdrew a fixed amount in the beginning of each month. (i) finterest on drawings is 2,400 and he withdrew a fixed amount in the middle of each month. (i) interest on drawings is & 2,750 and he withdrew a fixed amount at the end of each month. [Ans.: Amount of Drawings: (| 3,000; (it) 4,000; (i) € 5,000.) Calculate the amount of Shiv’s quarterly drawings for the year ended 31st March, 2023, in the following alternative cases when Partnership Deed allows interest on drawings @ 12% p. () Ifinterest on drawings is 1,500 and he withdrew a fixed amount in the beginning of each quarter. (i) IFinterest on drawings is 1,200 and he withdrew a fixed amount in the middle of each quarter. (i) Finterest on drawings is % 900 and he withdrew a fixed amount at the end of each quarter. {Ans.: Amount of Drawings: () & 5,000; (i) ® 5,000; (ii) & 5,000.1.94 Double Entry Book Keeping—CBSE XIl ach partner regularly withdrew € 20,000 per month as given belo, 49. Piyush, Harmesh and Atul are partners. E (a) Piyush withdrew in the beginning of the month; (b)_Harmesh withdrew in the middle of the month; and (©) Atul withdrew at the end of the month. Interest on drawings charged for the year ended 31st March, 2023 was % 15,600, % 14,400 and & 13,299 respectively. Determine the rate of interest charged on drawings. [Ans.: Rate of Interest on Drawings: Piyush—12%;, Harmesh—12% and Atul—12%) ‘an in the following cases: 50. Calculate the Rate of interest on Drawings of Mohi 1 ended 31st March, 2023 and (a) If he withdrew & 6,000 in the beginning of each quarter for the yeat interest on drawings is € 1,500. (6) if he withdrew 6,000 at the end of each quarter for the year ended 31st March, 2023 and interest on drawings is € 900. i (©) Ithe withdrew 6,000 per quarter for the year ended 31st March, 2023 and interest on drawings is 1,200, [Ans.: (a) 10%; (b) 10% and (c) 10%, Profit & Loss Appropriation Account and Partners’ Capital Accounts 51. Amit and Vijay started a partnership business on 1st April, 2022. Capital invested by them were 2,00,000 and ¥ 1,50,000 respectively. The Partnership Deed provided as follows: (a) Interest on capital be allowed @ 10% p.a. (b) Amit to get a salary of € 2,000 per month and Vijay & 3,000 per month. (©) Profits are to be shared in the ratio of 3:2. Net Profit for the year ended 31st March, 2023 was € 2,16,000. Interest charged on drawings was ® 2,200 for Amit and % 2,500 for Vijay. Prepare Profit & Loss Appropriation Account. [Ans.: Share of Profit: Amit—X 75,420; Vijay— 50,280.) Aand B are partners sharing profits and losses in the ratio of 3: 1. On 1st April, 2022, their capitals were: ‘A 5,00,000 and B & 3,00,000. During the year ended 31st March, 2023, the firm earned a net profit of 5,00,000. The terms of partnership are: (a) Interest on capital is to be allowed @ 6% p.a. (b) Awill get a commission @ 2% on net sales. (Q) Bwill get a salary of € 5,000 per month. (a) B will get commission of 5% on profits after deduction of all expenses including such commission. Partners’ drawings for the year were: A € 80,000 and B % 60,000. Net Sales for the year was & 30,00,000. After considering the above facts, you are required to prepare Profit & Loss Appropriation Account and Partners’ Capital Accounts. 52. “ommission of B—X 15,810; Share of Profit: A 2,37, 140; B— 79,050; Capital A/cs: A—R 7,47,140; B— 4,12,860.] 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 distributed as: (a) The first € 20,000 in proportion to their capitals. (b)_ Next 30,000 in the ratio of 5:3: 2. () Remaining profits to be shared equally. The firm earned net profit of € 1,72,000 before charging any of the above items. Prepare Profit & Loss Appropriation Account and pass necessary Journal entry for the appropriation of profits. (Foreign 2009) {Ans.: Divisible Profit— 1,40,000; A’s share— 50,000; 8's share—X 44,000; C’s share—X 46,0001 [Ans.: 53.Chapter 1 - Accounting for Partnership Firms—Fundamentals 1.95 | 4. Amit, Binita and Charu are three partners. On Ist April, 2022, their Capitals stood as: Amit & 1,00,000, Binita 54 00,000 and Charu & 3,00,000. It was decided that: fa) they would receive interest on Capitals @ 5% pa, {o) Amit would get a salary of € 10,000 per month, (c) Binita would receive commission @ 5% of net profit after deduction of commission, and (@) 10% of the net profit would be transferred to the General Reserve, Before the above items were ‘taken into account, profit for the year ended 31st March, 2023 was % 5,00,000. prepare Profit & Loss Appropriation Account and the Capital Accounts of the Partners. [Ans.: Divisible Profit— 2,76, 190; Commission (Binita)—% 23,810; General Reserve— 50,000; Share of Profit: Amit 92,063; Binita—% 92,063, Charu—X 92,064; Closing Balances of Capital A/cs: Amit—R 3, 17,063; Binita— 3,25,873; Charu—X 4,07,064.) Yadu, Vidu and Radhu were partners in a firm sharing profits in the ratio of 4: 3 : 3. Their fixed capitals on 1st April, 2018 were & 9,00,000, & 5,00,000 and ¥ 4,00,000 respectively. On 1st November, 2018, Yadu gave Joan of 80,000 to the firm, as per the partnership agreement. (i) The partners were entitled to an interest on capital @ 6% pa. (i) Interest on partners’ drawings was to be charged @ 8% p. 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—X 50,000. Prepare Profit & Loss Appropriation Account for the year ending 31st March, 2019. (CBSE 2020 [Ans.: Share of Profit: Yadu—X 61,200; Vidu— 45,900; Radhu—X 45,900.) [Hint: Interest on drawings is charged on total amount for an average period of 6 months.] . 55. Transfer of Profit to Reserve 56. Sajal and Kajal are partners sharing profits and losses in the ratio of 2: 1. On 1st April, 2022, their Capitals were: Sajal— 5,00,000 and Kajal—% 4,00,000. Prepare Profit & Loss Appropriation Account and the Partners’ Capital Accounts for the year ended 31st March, 2023 from the following information: (2) Interest on Capital is to be allowed @ 5% p.a. (0) Interest on the loan advanced by Kajal for the complete year, the amount of loan being % 3,00,000. (© Interest on partners’ drawings @ 6% p.a. Drawings: Sajal = 1,00,000 and Kajal % 80,000. (a) 10% of the divisible profit is to be transferred to General Reserve. Profit, before giving effect to the above, for the year ended 31st March, 2023 is & 7,02,600. [Ans.: Closing Balances of Capital A/cs: Sajal— 8,09,000; Kajal— 5,31,100; Share of Profit: Sajal—X 3,87,000; Kajal— 1,93,500; General Reserve— 64,500.] {Hint: Interest on loan by a partner is a charge] 57. Aliand Bahadur are partners ina firm sharing profits and losses as Ali 70% and Bahadur 30%. Their respective Capitals as at 1st April, 2022 stand as Ali & 2,50,000 and Bahadur € 2,00,000. The partners are allowed interest On capitals @ 5% p.a. Drawings of the partners during the year ended 31st March, 2023 were % 35,000 and 25,000 respectively. Profit for the year, before allowing interest on capital and yearly salary of Bahadur @ X 30,000, was € 4,00,000, 10% of divisible profit is to be transferred to Reserve. Prepare Partners’ Current Accounts and Capital Accounts recording the above transactions. [Ans.: Current Accounts: Ali—¥ 1,96,420; Bahadur—X 1,08,830; Amount transferred to Reserve— 34,750.)1.96 Double Entry Book Keeping—CBSE XIl 59. Xand entered into partnership on 1st April ratio of 5:3: 2. Their capitals as on Ist Apri, ring profits in the | 2,00,000. Kabir, Zoravar and Parul are partners shai 2022 were: Kabir 5,20,000, Zoravar—X 3,20,000 and Paru The Partnership Deed provided as follows: (i) Kabir and Zoravar each will get salary of & 24,000 pa. (ii) Parul will get commission of 2% of Net Sales. (ii) Interest on capital is to be allowed @ 5% p2- (iv) Interest on Drawings is to be charged @ 5% p2. (v)_ 10% of Divisible Profit isto be transferred to General Reserve. Net Sales forthe year ended 31st March, 2023 were © 50,00,000. Dr the year was & 60,000. Net Profit for the year was z ese Penneser iat the year ende , 2023. iuaeaani Aeterna roa Kbi—E 40,000; Zoravar—X 32,000; Parul— 88,000} it is distributed in the ratio of net profit is not adequate to meet the appropriations, i 50,000 :& 40,000 : 1,10,000 or 5:4:11- amount will not be transferred to General Reserve] 2018. Their capitals as on 1st April, 2022 were ¥ 2,00,000 and 2022, X gave T 50,000 as loan to the firm. As per the provisions of wings by each of the partners during [Hints: 1, Since, appropriation to be made, 2. Inthe absence of divisible profit, %1,50,000 respectively. On 1st October, the Partnership Deed: | . (i) 20% of Profits before charging Interest on Drawings but after making appropriations was to be transferred to General Reserve. 1d Interest on Drawings is to be charged @ 10% pa. (ii) Interest on capital is to be allowed @ 12% p.a. an Gi)_Xto get monthly salary of 5,000 and ¥ to get salary of€ 22,500 per quarter fiv) Xisentitled toa commission of 5% on sales. Sales for the year were % 3,50,000. {u) Profit to be shared in the ratio of their capitals up to & 1,75,000 and balance equally. Profit for the year ended 31st ‘March, 2023, before allowing orcharging interest was 4,61,000. The drawings of Xand ¥ were € 1,00,000 and © 1,25,000 respectively. Pass the necessary Journal entries relating to appropriation of profi Account and the Partners’ Capital Accounts. [Ans.: Interest on Capital: X—% 24,000; YX 18,000; Salary: XZ 60,000; Y—% 90,000; Commission: XX 17,500; Interest on Drawings: X— 5,000; Y—R 6,250; Share of Profit: XX 1, 18,125; YX 93,125; Capital Balance: X—X 3,14,625; ¥-¥ 2,19,875; Interest on Loan by X: 1,500; Transfer to General Reserve— 50,000 t. Prepare Profit & Loss Appropriation Adjustments for Incorrect Appropriations in the Past (Past Adjustments) 60. Reya, Mona and Nisha shared profits in the ratio of 3: 2: 1. Profits for the last three years were 61. 62. % 1,40,000; € 84,000 and Z 1,06,000 respectively. These profits were by mistake distributed equally. The error is now to be corrected. Give the necessary rectification Journal entry. [Ans.: Debit Nisha’s Capital A/c and Credit Reya's Capital A/c by ® 55,0001 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. tis decided to pass an adjustment entry in the beginning of the next year. Record the necessary Journal entry. [Ans.: Debit Azad by 1,000 and Credit Benny by 1,000. Ram, Mohan and Sohan sharing profits and losses equally have capitals of € 1,20,000, % 90,000 and % 60,000 be secaagd For the year ended 31st March, 2023, interest was credited to them @ 6% paa. intend: of 59% pa. ass the adjustment Journal entry. [Ans.: Debit Ram and Credit Sohan by ® 300.)