Very Short Answer TypeQuestions

88. The business of a partnership firm may be carried on by all the partners or any one of them acting for
all.One of the important implication of this statement is that every partner is entitled to participate in
the conduct of the affairs of its business. State the second important implication of this statement.
[Board Question)
Ans. Second implication of this statement is that the partners are having mutual agency relations.
89. Does partnership firm has a separate legal entity? Give reason in support of your answer.
[Board Question
Ans. No, according to law the partners and partnership firm have no separate legal entities.
90. What is the maximum number of partners that a partnership firm can have? Name the Act that provides
for the maximum number of partners in a partnership firm. [Board Question)
Ans. Maximum number of partners that a partnership firm can have is 50. The Act that provides for the
maximum number of partners in a partnership firm is Companies Act, 2013.
91. A group of 40 people wants to form a partnership firm. They want your advice regarding the maximum
number of persons that can be there in a partnership firm and the name of the Act under whose
provisions it is given. [Board Questionl
Ans. Maximum number of partners: 50
According to the Companies Act, 2013.
92. Mohit, Shobhit and Rohit are partners sharing profits and losses in the ratio 2:1:1. Rohit isguaranteed
a profit of 14,000. The firm incurred a profit of 20,000 during the year. Calculate the amount of
deficiency borne by Mohit and Shobhit. |BoardQuestionl
Ans. Guaranteed Profit of Rohit =14,000
1
Rohit's Share in Profit = 20,000 x =75,000
4

Deficiency =14,000 -35,000 =79,000

This Deficiency will be borne by Mohit and Shobhit in 2:1
00 x
Mohit will borne =9,000 =R6,000
3

1
Shobhit willborne =9,000 x 3 3,000
 Accounting for Partnership Firoo :
where will you record interest on drawings? Eundomcntals|75
If capitals are fixed,
93. When capitals are fixed, interestton drawings will be recorded on thee debit side of Partners Current Account.
Ans.
94. In the absence of any partnership deed, how are interest on capital and interest on partner's loan
treated?
on capital is not allowed. Interest on loan is a charge and will be
any agreement interest
Ans. In the absence of profits earned.
provided regardless of
Fixed Capital Account' and Fluctuating Capital Account' on the basis of credit
between
95. Distinguish |Board Ouesti
balance. balance.
Account always have credit
Ans. Fixed Capital Account may have credit or debit
balance.
Fluctuating Capital
firm sharing Pronts & loSses equally. Their fixed capitals were 1.00.000
Os P andd O were partners in a
respectively. The partnership deed provided for interest on capital at the rate of 10% per
and 50,000 31st March, 2016 the profits
of the firm were distributed without providing
ended
annum. For the year
Interest on Capital. error. IBoard Quesiio
necessary adjustment entry torectify the
Pass Journal
Debit Credit
Ans. L.E.
Particulars (3)
Date

2016 Dr. 2,500

April 1 Q'sCurrent A/c 2,500
To P's Current A/c
capital omitted in previous year)
(Being adjustment of interest on
Working Note: Adjustment Table
P () Q
() Total ()
Particulars + 15,000
+ 10,000 +5,000
Interest on capital -7,500 -7,500 -15,000
Profits are taken back Nil
+2,500 -2,500
Net Effect Dr.
Cr.
ended
were partners in a firm sharing profits in the ratio of 3 :2. During the year
97. Nusrat and Sonu
her drawings amounted to 7300.
31-3-2015 Nusrat had withdrawn 15,000. Interest on of the partners
drawings assuming that the capitals
Pass necessary journal entry for charging interest on (Board Question
were fixed.
Ans. Journal
Debit Credit
Particulars L.E.
Date () ()
2015
Mar. 31 Nusrat's Current A/c Dr. 300
300
To Interest on Drawings A/c
(Being interest charged on Nusrat's drawings)
98. If the partners' capitals are fixed, where will you record the interest charged on drawings?
|Board Ques
Ans. Interest charged on drawings is to be debited to Partners' Current Accounts when the partners' captals
are fixed.
99. When the partner capitals are fixed, where the drawings made by a partner will be
recordedr
|Board Questi
Ans. Partrner's Current Account will record the drawings when
100. Give two circumstances in which the the partner's capitals are fixed.
Ans. If the partners bringin some additionalfixed capitals of partners may
capital during thecourse f thechange.
withdraw some amount of their capitals through an business of the firm. ruie p
agreement among themseve
 76|CBSE Question Bank Accountancy - XI
101. Chhavi and Neha were partners in a firm sharing profits and losses equally. Chhavi withdrew a fixed
amount at the beginning of each quarter. Interest on drawings is charged @6% p.a. At the end of
the year, interest on Chhavi's drawings amounted to 900. Pass necessary journal entry for chargin
interest on drawings. |Board Question
Ans. Journal
Debit Credit
Date Particulars L.E.
(8) ()
Chhavi's Capital A/c Dr. 900
To Interest on Drawings A/c 900
(Being interest on drawings charged)
102. 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, theprofits of the firm were distributed without providing interest on
capital.
Pass necessary adjustment entry to rectify the error. |Board Question]
Ans. Journal
Debit Credit
Date Particulars L.E
) (?)
2016
April 1 P's Current A/c Dr. 6,000
To Q's Current Ac 6,000
(Being error rectified)
Working Note:
Adjustment Table
P Firm
Particulars
Dr. () Cr. () Dr. () Cr. () Dr. () Cr. (3)
Interest on capital @12% 24,000 36,000 60,000
Profit to be distributed (1:1) 30,000 30,000 60,000
30,000 24,000 30,000 36,000 60,000 60,000
Net Effect 6,000 6,000
Dr. Cr.
103. A partner in the firm withdraws 1,000 during the year evenly at the beginning of every month.
According to the deed, interest on drawings is to be charged @9% p.a. State the amount of interest on
drawings.
Ans. Total Drawings =1,000 × 12 =12,000
9 6.5
Interest on Drawings =12,000 x X
=7585
100 12

104. A firm had 5,00,000 assets and 2,10,000 liabilities.The normal profit rate is 15%. State the normal
profits.
Ans. Capital Employed =5,00,000 -*2,10,000 =2,90,000
15
Normal Profit =2,90,000 x 100 =43,500
105. In a firm the goodwillwas to be calculated by average profit method. The profits of the last 5years were
(i) Z10,000 (ii) <12,000 (ii){16,000 (iv) ?15,000 (v) 17,000. State the goodwill if it is calculated on the
basis of 3 years purchase of last 5 years' profits.
10,000 +12,000+16,000+15,000+17, 000 =714,000
Ans. Average Profit = 5

Goodwill= Average Profit x No. of years' Purchase

=14,000 x 3
=42,000
 Accounting for Partnership Firms: Fundanentals 77

106. amounted
Afrm earnsto 80,000 as its average proits. The rate of normal prott being 10%, the assets of the firm
10,00,000 and liabilities are R4.40.000. Calculate the value of Goodwill according to
Capitalisation of Average Profit Method. T80,000x100
Average Profitx 100 =78,00,000.
Ans. Capitalised Value of the Firm = 10
Normal Rate of Return
Net Assets = Total Assets-Outside Liabilities
=10,00,000 -4,40,000 =5,60,000
Firm -Net Assets
Goodwill = Capitalised Valueof the
-78,00,000-5.60.000=2,40,000.
107. What is Hidden Goodwill?
is not specified at the time of admission of a partner.
Ans. Hidden Goodwill means the value of g0odwill that capital of all partners.
firms over the actual combined
It is the excess of desired total capital of the [Board Question)
108. How does Nature of business' affect the value of goodwill of a im
government
demand for them, competition prevailingsituations
Ans. The nature of business means the type of products, worthy to be looked upon. When all these are
regulations affecting the business, et.. that are
will, thus, increase the value of goodwill.
tavourable, earnings of the firm will be higher and it

Short Answer Type Questions

firm. They contributed 50,000 each as capital
three years
109. Mona, Nisha and Priyanka are partners in a busy. The profits
the business as Mona and Nisha were
ago. At that time Priyanka agreed to look after books
past three years were 15,000, 25,000 and 750,000 respectively. While going through the
for the distributed in the ratio of 1:1:2. When she enguired
of accountsMona noticed that the profit had been since she looked after the business she should get
fromPriyanka about this,Priyanka answered that
profit equally retrospectively for the last
more profit. Mona disagreed and it was decided to distribute
three years.
accounts of Mona, Nisha and Priyanka
You are required to make necessary correction in the books of (Board Question]
by passing an adjustment entry.
Ans. Journal
Debit Credit
Date Particulars L.F
() ()
Priyanka's Capital A/c Dr. 15,000
To Mona's Capital A/c 7,500
To Nisha's Capital A/c 7,500
(Being profit distributed in wrong ratio now rectified)
Total Profits (Past 3 years) =15,000 +*25,000 +*50,000 790,000
Adjustment Table
Particulars Mona Nisha Priyanka Total
() () ()
Wrong Distribution of Profit (1 :1:2) Dr. 22,500 22,500 45,000 90,000
Right Distribution of Profit (1: 1:1) Cr. (30,000) (90,000)
Net Effect (30,000) (30,000)
(7,500)Cr.(7,500) Cr. (15,000) Dr.
110. Mohan, Neeraj and Peeyush are partners in a firm. They
ago. At the time Peeyush agreed to look after the contributed 75.000 each as capital three years
for the past three years were 45,000, 130,000 and business as Mohan and Neerai were busy. The prouts
of accounts, Mohan noticed that profit 60,000 respectively. While going through the book
had been distributed in 1:12 ratio,
Peeyush about this, Peeyush answered that since he When he enquureu
profit. Mohan disagreed and it was decided to distribute looked after thebusiness he snouu b fer
the last three years. nrofte anallywith retrospective etect o
You are required to make
necessary corrections in the books of
by passing an adjustment entry. of Mohan, Neeraj and Peeyush
accounts |Board Questionl
78 |CBSE Question Bank
Accountancy - XII
Ans.Total profit for past 3 vars =F45,000 +30,000 +60,000 =1,35,000
Adjustment Table
Mohan Neeraj Peeyush
() ()
Particulars ()
33,750 67,500
33,750
Profit already received(1,35,000in 1:1:2) 45,000 45,000 45,000
Profit ought to have been received (71,35,000 in 1:1:1) 11,250 Cr. 11,360 Cr. 22,500 Dr,
Amount to be adjusted
Journal Debit Credit
L.E. )
Date Particulars (3)
Dr. 22,500
Peeyush's Capital Ac 11,250
To Mohan's Capital A/c 11,250
To Neeraj's Capital A/c
divided in wrong ratio)
(Being the adjustment made for profit firm.
affect the value of goodwill of a
111. Mention the factors, which
value of goodwill : (1) Location, (2) Larger Establisment of Business,
affect the Management, (7) Access to
Ans. Following important factors Market Situation (5) Trend of Profit, (6) Efficiency of
(3) Nature of Business, (4) Service.
with Business, (10) After Sale
Supplies, (8) Quality, (9) Risk Associated to government
and Vijay, entered into partnership for supplying laboratory equipments 80,000 and 750,000
112. On 1.4.2013 Jay backward areas. They contributed capitals of
remote and that
8 schools situated in
share the profits in the ratio of 3 : 2. The partnership deed provided
respectively and agreed to annum. During the year the firm earned a
profit of 7,800.
capital shall be allowed at 9% per
interest on of Jay and Vijay
and Loss Appropriation Account[Board
Showing your calculations clearly, prepare Profit Question]
for the year ended 31-3-2014.
In the Books of Jay and Vijay
Profit and Loss Appropriation Account Cr.
Dr. for the year ended 31st March, 2014
Particulars Amount ()
Particulars Amount ()
7,800
To Interest on Capital: By Profit and Loss A/c
Jay's Capital 4,800
Vijay's Capital 3,000 7,800
7,800
7,800

Working Notes:
1. Calculation of Interest on Capital :
9
On Jay's Capital =80,000 x 100 =7,200
9
On Vijay'sCapital =50,000 x 100 =4,500
Total Interest =R7,200 + 4,500 =11,700
2. Calculation of Proportionate Interest on Capital :
7,200
Proportionate Interest to Jay = 11,700 x7,800 =4,800
4,500 x 7,800 =73,000
Proportionate Interest to Vijay = 11,700
and isto be provided to the extern
Note: Interest on capital is to be treated as an appropriation of profits
of available profit i.e., 7,800.
 Accounting for Partnership Firms : Fundamentals 79
113, Peter and Harry were partners in a frm profits in the ratio of 5 :3. During the year ended
sharing his amounted to 2,000.
31.3.2015 Peter had withdrawn 40,000. Interest on drawings an that the capitals of the partners
Pass necessary journal entry for charging interestton drawings assuming [Board Question
were fluctuating.
Ans.
Journal Debit Credit
L.E
Date () ()
Particulars
2015 2,000
Dr.
Mar. 31Tom's Capital A/c 2,000
To Interest on Drawings A/c
(Being interest on drawings changed) of return of the
few years. The normal rate2,00,000.
3.00.000 during the last Calculate
i n e daverage profit of s liabilities were
and its
industry is 15%. The assets of the business were 17,00,000 [Board Question]
the goodwillof the firm by capitalisation of average profits.
Ans. Average Profit =3,00,000
-2,00,000
Net Assets =17,00,000
=(15,00,000
100
Capitalised Value of Average Profit =3,00,000 x 15
=¿20,00,000
Value of Average Profit - Net Assets
Goodwill of the Firm =Capitalised
=20,00,000 -15,00,000
=75,00,000
similar
80,000and the normal rate of return in a
profitsof a firm during the last few years are
115. Average years' purchase of super profit, find the
business is 10%. Ifthe goodwill of the firm is1,00,000 at 4 [Board Question]
capital employed by the firm.
Ans. Goodwill = Super Profit x No. of Years' Purchase
1,00,000= (Average Profit - Normal Profit) x 4
1,00,000= (80,000 Normal Profit) x 4
1,00,000 80,000 - Normal Profit
4
Normal Profit=80,000 -25,000 =55,000
Normal Rate of Return
Normal Profit - Capital Employed * 100
10
<55,000 =Capital Employed x 100
100
Capital Employed =55,000 x =75,50,000
10

116. The firm of P, Qand Rearned 4,00,000 average profits during the last three years. The capital employed
in the business was 6,00,000. Normal rate of return of the industry is 8%.
Calculate the goodwillof the fim by capitalising the super profits. |Board Questionl
Ans. Average Profit =4,00,000
Normal Profit = Capital Employed x Normal Rate of Return
8
=6,00,000 x
100
=48,000
Super Profit= Average Profit - Normal
Profit
=74,00,00048,000
-73,52,000
30 |CBSE Question Bank Accountancy - XII
100
Goodwill = Super Profit x
Normal Rate of Return
100
=73,52,000 x
8

=44,00,000
rate of interest is 15%. Annual
117. The capital of the firm of Anui and Benu is Z10.00.000 and the market
were 3,00,000, *3,60,000 and
Salary to the partners is 60,000 each. The profit for the last three years purchase of last three years
R4,20,000. Goodwill of the firm is to be valued on the basis of two years [Board Question)
average super profits. Calculate the goodwill of the firm.
73,00, 000+73,60,000 +4, 20,000 =3,60,000
Ans. Average Profit before Salary = 3

Average Profit after Salary or Actual Profit =73,60,000 *1,20,000

=2,40,000
15
Normal Profit =10,00,000 x =71,50,000
100

Super Profit = Actual Profit - Normal Profit

=72,40,000*1,50,000
=90,000
Goodwill - Super profit xNumber of years purchase
=790,000 × 2
=1,80,000

Short Answer Type Questions-I

J8. Arun, Shobha and Yuvraj were partners in a firm. On 1t April, 2018 their Fixed Capitals stood at
1,00,000, <50,000 and 50,000 respectively.
As per the provisions of partnership deed,
(i) Partnerswere entitled to an annual salary of 20,000 each.
(ii) Interest on Capital ® 10% p.a.was to be provided.
(iii) Profits were to be shared in the ratio 3:1:1. Net profit for the year ended 31st March, 2019 was
790,000.
Pass Journal entries for the above in the books of the firm. [Board Question)
Ans. Journal
Debit Credit
Date Particulars L.F
()
Profit and Loss A/c Dr. 90,000
To Profit and Loss Appropriation A/c 90,000
(Being profit transferred to Profit and Loss Appropriation Account)
Partner's Salary A/c Dr. 60,000
To Arun's Current A/c 20,000
ToShobha's Current A/c 20,000
To Yuvraj's Current A/c 20,000

(Being salary due)

Profit and Loss Appropriation A/e Dr. 60,000
60,000
To Partner's Salary A/c
debited to profit and loss appropriation account)
(Beingsalaries
 Accounting for Partnership Firms :
|Interest on Capital A/c Dr.
Fundamentals 81
To Arun's Current A/c 20,000
To Shobha's Current A/c 10,000
To Yuvraj's Current A/c 5,000
(Being interest on capital due) 5,000
Profit and Loss Appropriation A/c Dr. 20,000
To Interest on Capital A/c 20,000
(Being interest on capital transferred to profit and loss appropriation
account)
Profit and Loss Appropriation A/c Dr. 10,000
To Arun's Current A/c 6,000
To Shobha's Current A/c 2,000
2,000
To Yuvraj's Current A/c
(Being profit shared by partners)
On 1-4-2014 they admitted R as anew
19. P andO were partners in a firm sharing profits in the ratio of 5 :3.
guaranteed profit of 75,000. The new profit sharing ratio
partner for 1/3th share in the profits with a any deficiency on account of guarantee
between P and O will remain the same but they agreed to bear31-3-2015 was74,00,000,
ended
toR in the ratio 3:2.The profit of the firm for the year
for the year ended 31-3-2015.
Prepare Profit and Loss Appropriation Account of P, Q and R
[Board Question]
ns. Profit and Loss Appropriation Account
Dr. for the year ended 31st March, 2015 Cr.

Particulars Amount () Particulars Amount ()

ToProfit transferred to Partner's By Profit and Loss A/c 4,00,000
Capital A/c:
P 2,03,750
Q 1,21,250
R 75,000 4,00,000
4,00,000 4,00,000

Working Notes:
Let total share =1
1
R's share =

1 7
Remairing share =1--;
5 35
P's new share = 7
8 64
7 3 21
Q's new share =
8 64
New Ratio =35: 21:8
R's share in profit =4,00,000 x 1 =50,000
Minimum guaranteed profit to R =75,000
Deficiency =75,000- 50,000 25,000
Deficiency to be borne by P =25,000 % -15,000
3
5
Deficiency to be borne by Q 25,000 × R10,000
5
 82 |CBSE Question Bank
Accountancy - XII
35
P's share in profit - 4,00,000 x 64 15,000 =2,18,750 -Z15,000 =2,03,750

Qs share in profit =4,00,000 x21

64
10,000 1,31,250 - 10,000=1,21,250
120. Singh and Gupta decided to start a partnership irm to manufacture low cost jute bags as plastic bag,
were creating many environmental problems. They contributed capitals of *1,00,000 and 50,000on
1 April, 2012 for this. Singh expressed his willingness to admit Shakti as a partner without capital,
who is specially abled but a very creative and intelligent friend of his. Gupta agreed to this. The terma
of partnership were as follows:
() Singh, Gupta and Shakti will share profits in the ratio of 2:2:1.
(ii) Interest on capital will be provided @6% p.a.
Due to shortage of capital, Singh contributed {25,000 on 30th September, 2012 and Gupta contributed
{10,000 on 1st January, 2013 as additional capital. The profit of the firm for the year ended 313t March.
2013 was 1,68,900.
Prepare Profit and Loss Appropriation Account for the year ending 31t March, 2013.
[Board Question)
Ans. Profit and Loss Appropriation Account
Dr. for the year ended 31st March, 2013 Cr
Particulars Amount () Particulars Amount (?)
To Interest on Capital A/c: By Profit and Loss A/c 1,68,900
Singh 6,750
Gupta 3,150 9,900
To Profit transferred to:
Singh's Capital A/c 63,600
Gupta's Capital A/c 63,600
Shakti's Capital A/c 31,800 1,59,000
1,68,900 1,68,900
Working Notes :
Calculation of Interest on Capital:
Interest on Singh's Capital:
On 1,00,000 for whole year = 1,00,000 x 6
100
=6,000

On 25,000 for 6 months (from Sept. 30 to Mar. 31) = 25,000 x 6 6

=750
100 12
Total Interest on Singh's Capital =6,000 + 750 =6,750
Interest on Gupta's Capital:
6
On 50,000 for whole year = 50,000 x =73,000
100

On 10,000 for 3 months (from Jan. 01 to Mar. 31) = 10,000 % 6 3

=150
100 12
Total Interest on Gupta's Capital =3,000 + 7150 =73,150
A21. Satnam and Qureshi after doing their MBA decided to start a partnership frm to manufacture 19l
marked electronic goods for economically weaker section of the society. Satnam also expressed
willingness to admit Juliee as a partner withoutcapital who is specially abled but a very creative and
intelligent friend of him. Qureshi agreed to this. They formed a partnership on 1t April, 2012 on th
following terms :
() Satnam willcontribute 4,00,000 and Qureshi will contribute 2,00,000 as capitals.
Juliee will share profits in the ratio of 2:2: 1.
(ii) Satnam, Qureshi and will be allowed@ 6% p.a.
(iii) Interest on capital
 Fundamentals 83
Accounting for Partnership Firms :
2012 and Qureshi contributed
Due to shortage of capital Satnam contributed 750,000 on 30th September,
the firm for the year ended 31st March,
{20,000 on 1t January, 2013 as additional capitals. The profitof
2013 was 73,37,800.
ending 319t March, 2013.
Prepare Profit &Loss Appropriation Account for the year |Board Question l
Account
Ans. Profit and Loss Appropriation Cr.
March, 2013
Dr.
for the year ended 31st Particulars Amount (?)
Particulars Amount () A/c 3,37,800
Loss
To Interest on Capital Alc: By Profit and
Satnam 25,500
Qureshi 12,300 37,800
To Profit transferred to:
Satnam's Capital A/c 1,20,000
Qureshi's Capital A/c 1,20,000
Juliee's Capital A/c 60,000 3,00,000 3,37,800
3,37,800

Working Notes:
Calculation of Interest on Capital:
Interest on Satnam's Capital:
6
On 4,00,000 for whole year = 4,00,000 x =724,000
100
6 6
On 750,000 for 6 months = 50,000 x =1,500
100 12
+1,500=25,500
Total Interest on Satnam's Capital =24,000
Interest on Qureshi's Capital:
6
On 2,00,000 for whole year =2,00,000 =(12,000
100
6 3
On 20,000 for 3 months = 20,000 x 100 =7300
12

Total Interest on Qureshi's Capital =12,000 +300 =12,300

122.Prem, Param and Priya were partners in afirm. Their fixed capitals were Prem 2,00,000; Param {3,00,000
and Priya 75,00,000.They were sharing profits in the ratio of their capitals. The firm was engaged in the
sale of ready-to-eat food packets at three different locations in the city, each being managed by Prem,
Param and Priya. The outlet managed by Prem was doing more business than the outlets managed by
Param and Priya. Prem requested Param and Priya for ahigher share in the profits of the firm which
Param and Priya accepted. It was decided that the new profit sharing ratio will be 2:1:2 and its
effect will be introduced retrospectively for the last four years. The profits of the last
four years were
22,00,000; 3,50,000; *4,75,000 and ?5,25,000 respectively.
Showing your calculations clearly, pass anecessary adjustment entry to give effect to the new agreement
between Prem, Param and Priya.
Ans.
[Board Question]
Journal
Date
Particulars L.E
Debit Credit
Param's Current Alc ) 8)
Priya's Current A/c Dr. 1,55,000
To Prem's Current Alc Dr. 1,55,000
(Being rectification done) 3,10,000
 CBSE Questlon Bank Accountancy- XIl

Adjustment Table
Prem Param Priya Total
Particulars
(3) (3) («) (?)
Profit to be credited (Cr.) 6,20,000 3,10,000 6,20,000 15,50,000
Profit wrongly credited (Dr.) 3,10,000 4,65,000 7,75,000 15,50,000
Difference 3,10,000 (1,55,000) (1,55,000)
Cr. Dr. Dr.
Working Notes:
1. Calculation of Profit Share in Capital Ratio (2:3:5)
Total Profit of last 4 years =(2,00,000 +3,50,000 +4,75,000 +5,25,000) =15,50,000
2
Prem's Share = 15,50,000 x 10 =3,10,000
3
Param's Share = 15,50,000 x -74,65,000
10
5
Priya's Share = 15,50,000 x =7,75,000
10
2. Calculation of Profit Share in New Ratio (2:1:2)
Prem's Share 15,50,000 × 2 =6,20,000
5
1
Param's Share = 15,50,000 x =3,10,000
5
2
Priya's Share = 15,50,000 x =6,20,000

123. Puneet and Akshara were partners in a firm sharing profits and losses in the ratio of 2 :3. The following
was the balance sheet of the firm as on 31st March, 2019:
Balance Sheet of Puneet and Akshara
as on 315t March, 2019
Liabilities Amount () Assets Amount ()
Capitals: Sundry Assets 2,00,000
Puneet 90,000
Akshara 1,10,000 2,00,000
2,00,000 2,00,000
The profits 40,000 for the year ended 31st March, 2019 were divided between the partners withour
allowing interest on capital @5% p.a. and commission to Akshara @1,000 per quarter.
Thedrawings of the partners during the year were :
Puneet ?2,500 per month.
Akshara 10,000 per quarter.
Showing your workings clearly, pass necessary adjustment entry in the books of the firm.
|Board Questiod
Ans. In the Books of Puneet and Akshara
Journal
Credit
Date Particulars Debit
L.E (8)
()
Puneet's Capital A/c Dr. 1,000
l,00
To Akshara's Capital A/c
(Being adjustment entry passed)
 Fundamentals| 85
Firms :
Accounting for Partnership
Working Notes:
Calculation of Opening Capital Puneet Akshara

(<) ()
Particulars 1,10,000
90,000
Closing Capital 30,000
40,000
(+) Drawings 1,50,000
1,20,000
(16,000) (24,000)
(- Profit 1,26,000
1,04,000
Opening Capital
Adjustment Table
Puneet Akshara Total
Particulars (K) (() ()
6,300 11,500
Interest on Capital @5% p.a. 5,200
4,000 4,000
Commission to Akshara
5,200 10,300 15,500

() Profit wrongly distributed (2:3) (6,200) (9,300) (15,500)

(1,000) 1,000 NIL

Dr. Cr.

on 31" March, 2018 after

124. A and Bare partners sharing profits and losses in the ratio of 3:2. Their capital
all adjustments stood at 1,65,500 and 1,27,600 respectively.
Profits amounting to 750,000 for the year 2017-18 were distributed after allowing interest on drawings @
12% p.a. During the year A withdrew 15,000 at the beginning of every quarter and B withdrew 740,000
during the year. Partnership deed is silent on interest on drawings but provides for interest on capital
@5% p.a. Interest on Capital has not been provided.
Showing your workings clearly, pass the necessary adjustment entry to rectify the above errors.
[Board Question
Ans. Calculation of Opening Capital
Particulars A () B ()
Closing Capital 1,65,500 1,27,600
Less: Profit
(30,000) (20,000)
Add: Drawings 60,000 40,000
Add: Interest on Drawings
4,500 2,400
Opening Capital
2,00,000 1,50,000
Adjustment Table
Particulars
I Wrongly taken Profit A 3) B(3)
Less: Interest on Drawings 30,000 20,000
4,500 2,400
II Should get: Interest on Capital
Profit
25,500 17,600
10,000 7,500
15,360 10,240
Net Effect
25,360 17,740
140 Dr. 140 Cr.
 S6 CBSE Question Bank Accountancy- XII
Journal
Debit
Date Particulars L.E
(?)
Credit
A's Capital A/c Dr. 140
To B's Capital A/c 140
(Being error rectified)
125. Enunmerate the steps involved in valuing the goodwill according to super profit methods.
Ans. Steps involved in valuing Goodwill by Super Profit Method:
Step 1:Calculate Capital Employed, (Total shareholder's equity +Long-term debt).
Step 2: Calculate normal profit by multiplying capital employed with normal rate of return.
Step 3: Calculate average maintainable profit (profit after adjusting exceptional items)
Step 4: Super Profit= Average Maintainable Profit - Normal Profit.
Step 5: Goodwill =Super Profit xNumber of years of purchase.
Long Anmswer Type Questions
126. Anwar, Biswas and Divya are partners in a firm. Their capital accounts stood at 8,00,000, 6,00,0
and 74,00,000 respectively on 1st April, 2011. They shared profits and losses in the ratio of 3 :2:1
respectively. Partners are entitled to interest on capital @6% per annum and salary to Biswas and Diya
@4,000 per month and 6,000 per quarter respectively as per the provisions of the partnership deed.
Biswas's share of profit including interest on capital but excluding salary is guaranteed at a minimun
of 82,000 p.a. Any deficiency arising on that account shall be met by Divya. The proit for the yea
ended 31st March, 2012 amounted to 73,12,000. Prepare Profit & Loss Appropriation Account for the
year ended on 31st March, 2012. (Board Questionl
Ans. Profit & Loss Appropriation Account
Dr. for the year ended 31st March, 2012 Cr.
Particulars Amount () Particulars Amount ()
To Interest on Capital: By Profit and Loss A/c (Net Profit) 3,12,000
Anwar 48,000
Biswas 36,000
Divya 24,000 1,08,000
To Salary:
Biswas (4,000 x 12) 48,000
Divya (6,000 x4) 24,000 72,000
To Profit transferred to Capital A/c
Anwar 66,000
Biswas 46,000
Divya 20,000 1,32,000
3,12,000 3,12,000

Working Notes:
Profit available for distribution =3,12,000 -(*1,08,000 +*72,000) =1,32,000
Profit sharing ratio=3:2:1
3
Anwar'sProfit Share = 1,32,000 x =66,000

2
Biswas's Profit Share = 1,32,000 x 6 =44,000
1
Divya's Profit Share =132,000 x 6 =22,000
 Accounting for Partnership Firms : Fundamentals | 87
Biswas's Minimum Guaranteed Profit = 82,000 (including interest on capital but excluding $aiary
. Biswas's Minimum Guaranteed Profit (excludingintereston cavital and salary) =82,000 -36,000=<40,000
But Biswas's Actual Profit Share = 44,000
Deficiency in Biswas's Share -46,000-44,000 =2,000
This deficiency is to be borne by Divya alone.
Therefore, Divya's New Profit Share =22,000 -2,000=20,000
127. All, Bimal and Deepak are partners in a frm. On 19t April, 2011 their capital accounts stood at 4,00,000,
A3,00,000 and 2,00,000 respectively.Thev shared profts andlosses in the proportion of 5:3 :2. Partners
are entitled to interest on capital @10% per annum and salary to Bimal and Deepak@2,000 per month
and 3,000 per quarter respectively as per the provisions of the partnership deed.
Bimal's share of proft (excluding interest on capital but including salary) is guaranteed at a minimum
of <50,000 p.a. Any deficiency arising on that account shall be met by Deepak. The profits of the irm for
the year ended 31st March, 2012 amounted to 22.00.000. Prepare Profit &Loss Appropriation Account
for the year ended on 315t March, 2012. TBoard Ouestion!
Ans. Profit & Loss Appropriation Account
Cr.
Dr.
for the year ended 31st March, 2012
Particulars Amount () Particulars Amount ()
To Interest on Capital: By Profit and Loss A/c (Net Profit) 2,00,000
Ali 40,000
Bimal 30,000
Deepak 20,000 90,000
To Salary:
Bimal 24,000
Deepak 12,000 36,000
To Profit transferred to Capital A/cs
Ali 37,000
Bimal 26,000
Deepak 11,000 74,000
2,00,000 2,00,000
Working Notes:
Profit ayailable for distribution =2,00,000-(K90,000 + 36,000)=74,000
Profit sharing ratio =5:3:2
5
Ali's Profit Share = 74,000 x ={37,000
10
3
Bimal's Profit Share =74,000 x =(22,200
10
2
Deepak's Profit Share = 74,000 x =14,800
10
Bimal's Minimum Guaranteed Profit =50,000 (excluding interest on capital but including
. Bimal's Minimum Guaranteed Profit (excluding interest on capital and salary)
salaru) = 50,000 - 24,000 = 26,000
But, Bimal's Actual Profit Share =22,200
Deficiency in Bimal's Share =26,000 - 22,200 =3,800
This deficiency is to be borne by Deepak alone.
Therefore, Deepak's New Profit Share =14,800-3,800 =11,000
128. Anand, Bhaskar and Dinkar are partners in a irm, On 19t
April, 2011, the balance in their capte
áccountsstood at (10,00,000, 8,00,000 and 6,00,000 respectively. They shared profts in
of 5 : 4 :3 respectively. Partners are
entitled to interest on capital @10% per annumthean proporo
Bhaskar @4000 per month and a commission of 16.000 per f
the partnership deed. quarter to Dinkar as per the provisto
88 | CBSE Question Bank Accountancy - XIl
Anand's share of profit (excluding interest on capital) is guaranteed at not less than 1,90,000 pPa, Ans
but excluding salary) is guaranteed at not lesg
Bhaskars share of profit (including interest on capital be met by Dinkar. The profits of the
than 2,A5,000 p.a. Any deficiency arising on that account shall
8.32,000. Prepare 'Profit and Loss Appropriation
firm for the year ended 31st March, 2012 amounted to |Board Question)
Account for the year ended 31st March, 2012.
Ans. Profit & Loss Appropriation Account
Dr. for the year ended 31st March, 2012
Particulars Amount ()
Particulars Amount (?)
By Profit and Loss A/c (Net
Profit) 8,32,000
To Interest on Capital:
Anand 1,00,000
Bhaskar 80,000
Dinkar 60,000 2,40,000
To Salary to Bhaskar (4,000 ×12) 48,000
To Comission to Dinkar 64,000
(?16,000 x 4)
To Profit transferred to Capital A/cs
Anand 2,00,000
Bhaskar 1,65,000
1,15,000 4,80,000
Dinkar 8,32,000
8,32,000

Working Notes:
(2,40,000+48,000 +64,000) =4,80,000
Profit available for distribution = 78,32,000 -
Profit sharing ratio =5:4:3
5
Anand's Profit Share = 4,80,000 x 12 -2,00,000
4
Bhaskar's Profit Share = 4,80,000 x 12 =1,60,000
3
Dinkar's Profit Share = 4,80,000 x 12 -1,20,000
130.
interest on capital)
Anand's Minimum Guaranteed Profit =1,90,000 (excluding
But,Anand's Actual Profit Share = 2,00,000 2,00,000)
his actual profit share (i.e.,
This implies that there is no deficiency in Anand's profit share as
exceeds hisminimum guaranteed profit share (i.e., R1,90,000).
salary)
Bhaskar's Minimum Guaranteed Profit =2,45,000 (including interest on capital but excluding
capital and salary) = 2,45,000 - t80,00
.:. Bhaskar's Minimum Guaranteed Profit (excluding interest on
-1,65,000
But, Bhaskar's Actual Profit Share =R1,60,000
Deficiency in Bhaskar's Profit Share-1,65,000-1,60,000 =5,000
This deficiency is to be borne by Dinkar alone.
Therefore, Dinkar's New Profit Share =1,20,000-5,000 =1,15,000 Ans,
129. Ahmad, Bheem and Daniel are partners in a firm. On 1t April, 2011 the balance in their capital acco
B stood at <8,00,000, 6,00,000 and 4,00,000 respectively. They shared profits in the proportion of 5:
respectively. Partners are entitled to interest on capital@ 5% per annum and salary
to Bheem Oo
deed.
per month and a commission of 12,000 to Daniel as per the provisions of the partnership
25,000 p.a. Bhe
Ahmad's share of profit,excluding interest on capital, is guaranteed at not less than
at not less than o
share of profit, including interest on capital but excluding salary is guaranteed of
p.a. Any deficiency arising on that account shallbe met by Daniel. The profit the firm for the
ended 31t March 2012 amounted to 2,16,000.
 Accounting for Partnership Firms : Fundamentals | 89
Prepare Profit and Loss Appropriation Account for the year ended 31st March 2012. [Board Questionl
Ans,
P'rofit & Loss Appropriate Account
Dr.
jor the year ended 31st March, 2012
Cr.

Particulars Particulars Amount ()

Amount ()
To Interest on By Profit & Loss A/c (Net profit) 2,16,000
Ahmad
Capital:
40,000
Bheem 30,000
Daniel
20,000 90,000
To Bheem's Salary (73,000 x 12) 36,000
To Dariel's Capital A/c
To Profit transferred to(Commission)
12,000
Capital A/c:
Ahmad (78,0) 39,000

Bheem 78,000x 23,400

Add: Deficiency mnet by Daniel 1,600 25,000

Daniel(76,000 ) 15,600
Less: Contribution to Bheem 1,600 14,000
2,16,000 2,16,000

Working Notes:
1. Bheem's share of profit {23,400
Add: Interest on Capital 30,000
53,400
Less: Guranteed profit <55,000
Deficiency to be contributed by Daniel 1,600
Ahmad's share of profit =39,000 which is more than the guaranteed profit.
2

130. Naveen, Seerat and Hina were partners in a firm manufacturing blankets. They were sharing profits in
the ratio of5:3:2. Their capitals on 1" April,2012 were 2,00,000; 3,00,000 and 6,00,000 respectively.
After the floods in Uttaranchal, all partners decided to help the flood victims personally.
For this Naveen withdrew 10,000 from the firm on 1* September, 2012. Seerat, instead of withdrawing
cash from the firm took blankets amounting to 12,000 from the firm and distributed to the flood
victims. On the other hand, Hina withdrew 2,00,000 from her capital on 1st January, 2013 and set up a
centre to provide medical facilities in the flood affected area.,
Thepartnership deed provides for charging interest on drawings @6% p.a. After
were prepared, it was discovered that interest on drawings had the Final Accounts
not been charged. Give the necessary
adjusting journal entry and show the working notes clearly.
Ans.
|Board Questionl
Journal
Date
Particulars L.E
Debit Credit
Hina's Capital A/c () )
To Naveen's Capital A/c Dr. 2,258
To Seerat's Capital A/c 1,505
(Being interest on drawings has not 753
charged,now adjusted)
90 CBSE Question Bank Accountancy - XII

Adjusting Table
Naveen Seerat Hina
Particulars Total
) () ) O)
Interest on Drawings (Dr.) 350 360 3,000
Profit of 73,710 shared in ratio 5:3:2 (Cr.) 1,855
3,710
1,113 742
3,710
Difference 1505 (Cr.) 753 (Cr.) 2,258 (Dr.) Nl
Working Notes :
Calculation Interest on Drawings:
6 7
Interest on Naveen's Drawings =10,000 x =350
100 12
6 6
Interest on Seerat's Drawings =12,000 x =360
100 12

Interest on Hina's Drawings =2,00,000 x 6 3

=73,000
100 12
131. Jay, Vijay and Karan were partners of an architect firm sharing profits in the ratio of 2:2:1. Their
partnership deed provided the following :
(i) A monthly salary of 15,000 each to Jay and Vijay.
ii) Karan was guaranteed a profit of 5,00,000 and Jay guaranteed that he will earn an annual fee of
2,00,000. Any deficiency arising because of guarantee to Karan will be borne by Jay and Vijay in
the ratio of 3: 2.
During the year ended 31st March, 2018 Jay earned fee of 1,75,000 and the proits of the firm amounted
to 15,00,000.
Showing yor workings clearly prepare Profit and Loss Appropriation Account and the Capital
Account of Jay, Vijay and Karan for the year ended 31st March, 2018. [Board Question)
Ans. Profit & Loss Appropriate Account
Dr. for the year ended 31st March, 2018 Cr
Particulars Amount () Particulars Amount ()
To Salary: By Profit and Loss A/c 15,00,000
Jay 1,80,000 By Jay's Capital A/c
Vijay 1,80,000 3,60,000 (2,00,000 -1,75,000) 25,000
ToProfit transferred to Capital A/c
(WN)
Jay 3,05,800
Vijay 3,59,200
Karan 5,00,000 11,65,000
15,25,000 15,25,000
Dr. Partners' Capital Accounts Ct
Particulars Jay Vijay Karan Particulars Karan
Jay Vijay
(?) (?) () () ()
To Profit & Loss By Profit & Loss
Appropriation A/c 25,000 Appropriation A/c 1,80,000 1,80,000
(Salary)
To Balance c/d 4,60,800 5,39,200 5,00,000 By Profit &Loss 3,05,800 3,59,200 5,00,000
Appropriation A/c
(Profit)
4,85,800 5,39,200 5,00,000 4,85,800 5,39,200 5,00,000
 Accounting for Partnership Firms :
Working Notes: Fundamentals | 91
Divisible Profit =11,65,000
Jay's share in divisible profit - 11,65,000 x =4,66,000
5

Vijay's share in divisible profit 11,65,000 x =

5
-4,66,000
1
Karan's share in divisible profit =11,65,000 x 5 =12,33,000
Profit share guaranteed to Karan =5,00,000
Deficiency in Karan's share of profit =5,00,000 -- 2,33,000 =2,67,000
3
Deficiency to be borrne by Jay 2,67,000 x -1,60,200
5
2
Deficiency to be bome by Vijay - 2,67,000 x 5 -1,06,800

Jay's final share in divisible profit =4,66,000 -*1,06,200-*3,05,800

Vijay's final share in divisible profit =4,66,000-1,06,800 =3,59,200
Karan's final share in divisible profit= 2,33,000 + 1,60,200 + 1,06,800 =5,00,000
132. Sonu and Rajat started a partnership firm on April 1, 2017. They contributed 8,00,000 and 6,00,000
respectivelyas their capitals and decided to share profits and losses in the ratioof 3 : 2.
The partnership deed provided that Sonu was to be paid a salary of 20,000 per month and Rajat a
commission of 5% on turnover. It also provided that interest on capital be allowed @8% p.a. Sonu
withdrew 20,000 on 1st December, 2017 and Rajat withdrew 75,000 at the end of each month.
Interest on drawings was charged @6% p.a. The net profit as per Profit and Loss Account for the year
ended 31t March, 2018 was 4,89,950. The turnover of the firm for the year ended 31st March, 2018
amounted to 20,00,000. Pass necessary journal entries for the above transactions in the books of Sonu
and Rajat. |Board Question]
Ans. Journal
Date
Debit Credit
Particulars LE
) ()
2018
Mar. 31 Profit & Loss A/c Dr. 4,89,950
ToProfit &Loss Appropriation A/c 4,89,950
(Being profits transferred to profit and loss appropriation account)
Mar. 31 Partner's Salary A/c Dr. 2,40,000
To Sonu's Capital A/c 2,40,000
(Being salary credited to Sonu's capital account)
Mar. 31 Profit &Loss Appropriation A/c Dr. 2,40,000
To Partner's Salary A/c 2,40,000
(Being salary transferred to profit and loss appropriation
account)
Mar. 31 Partner's Commission A/c
Dr, 1,00,000
To Rajat's Capital A/c 1,00,000
u(Being commission credited to Rajat's capital account)
Mar. 31 Profit &Loss Appropriation A/c
Dr. 1,00,000
To Partner's Commission A/c 1,00,000
(Being commission transferred to profit and loss
account) appropriation
|CBSE Question Bank
Accountancy - XII
Mar. 31 1,12,000
Interest on Capital A/c Dr.
To Sonu's Capital A/c 64,000
To Rajat's Capital A/c 48,000
(Being interest on capital trarnsferred to partners' capital account)
Dr. 1,12,000
Mar. 31 Profit &Loss Appropriation A/c
To Interest on Capital A/c 1,12,000
(Being interest in capital transferred to profit and loss
appropriation account)
Dr. 400
Mar. 31 Sonu's Capital A/c 1,650
Dr.
Rajat's Capital A/c
2,050
To Interest on Drawings A/c
(Being interest on drawings charged)
Dr. 2,050
Mar. 31 Interest on Drawings A/c
2,050
To Profit &Loss Appropriation A/c
and loss
(Being interest on drawings transferred to profit
appropriation account)
Mar. 31 Profit & Loss Appropriation A/c Dr. 40,000
To Sonu's Capital A/c 24,000
To Rajat's Capital A/c 16,000

(Being profit credited to capital accounts of partners)

Working Notes:
1. Calculation of Interest on Drawings:
Drawings of Sonu =720,000
6 4
Interest on Sonu's Drawings = 20,000 x 100 =7400
12

Drawings of Rajat = 12 x 5,000 = 60,000

6 5.5
Interest on Rajat's Drawings =60,000 x 100 X
=1,650
12
2. Caleulation of divisible profit and its distribution between partners :
Divisible Profit =Net Profit +Interest on Drawings - Interest on Capital - Salary to
Sonu - Commission to Rajal
=14,89,950 +(400 +1,650) -(64,000 +48,000)-2,40,000-1,00,00
=740,000
3
Sonu's Share in Divisible Profit =40,000 x =(24,000
5

Rajat's share in Divisible Profit =40,000 x 2 =16,000

5

133. On 319t March, 2018 the balance in the Capital Accounts of Abhir, Bobby and Vineet,
after mak
adjustments for profits and drawings were 8,00,000, 6,00,000and 4,00,000respectively.
Subsequently, it was discovered that interest on capital and interest on drawings
The partners were entitled to interest on capital @10% p.a. and were to be charged had been omit
interest on draw
o 6% p.a. The drawings during the year were: Abhir - 20,000 drawn at the end of each month, Bop
-E50.000 drawn at the beginning of every half year and Vineet- 1,00,000 withdraywn on 31t Octo
2017. The net profit for the year ended 31" March, 2018 was 1,50,000. The profit sharing ratio w
2:2:1. you
Pass necessary adjusting entry for the above adjustments in the books of the firm. Also, show
workings clearly. IBoard Ouestio"
 Accounting for Partnership Firms : Fundamentais 93
Journal
Ans.
Debit Credit
Particulars L.E.
Date )

2018 Dr. 14,402

|April1 Bobby's Capital A/c 10,112
To Abhir's Current A/c
4,290
To Vineet's Current A/c
omissions)
(Being adjustment for
Working Notes:
Drawings:
1. Calculation of Interest on 5.5 6
=6,600
Abhir =((20,000 x 12) x x
12 100
9 6
=74,500
Bobby = 50,000 x 2) x 12
X
100
5 6 =2,500
Vineet =1,00,000 x X

12 100

2. Calculation of Opening Capital: Abhir Bobby Vineet

Particulars () ()
8,00,000 6,00,000 4,00,000
Capital on 31.3.18 1,00,000 1,00,000
2,40,000
Add: Drawings 7,00,000 5,00,000
10,40,000
60,000 60,000 30,000
Less: Share of Profit
9,80,000 6,40,000 4,70,000
Capital on 1.4.17
3. Total interest on Capital = 798,000 + 64,000 +47,000
=2,09,000
Profits available =150,000+13,600=1,63,600
98:64:47.
Interest on capital is given as 1,63,600 divided in the ratio of openingcapitals, i.e.,
4 Past Adjustment Table
Abhir Bobby Vineet Total
Particulars
) ) ) )
Cancellation of Profits 60,000 (Dr.) 60,000 (Dr.) 30,000 (Dr.) 1,50,000 (Cr.)
Omission of Interest on Drawings 6,600 (Dr.) 4,500 (Dr.,) 2,500 (Dr.) 13,600 (Cr.)
Omission of Interest on Capital 76,712 (Cr.) 50,098 (Cr.) 36,790 (C) 1,63,600 (Dr.)
Net Effect 10,112 (Cr.) 14,402 (Dr) 4,290 (Cr.)

134. Sudha, Naresh and Geeta were partners in afirm sharing profits in the ratio of 5 :3 :2. Their fixed
capitals were T6,0,000; *4,00,000 and 2,00,000 respectively. Besides her capital Geeta had given aloan
of 75,000 to the firm. Their partnership deed provided for the following:
(i) Interest on capital @9% p.a.
(ii) Interest on partners' drawings @12% p.a.
(iii) Salary to Sudha 30,000 per month and to Naresh
(iv) Interest on Geeta's loan @9% p.a. 40,000 per quarter.
During the year Sudha withdrew 50,000 at the end of
beginning of each half year and Geeta withdrew 70,000each guarter: Naresh withdrew 50,000 1n tne
at the end of each half year.
4 CBSE Question BankAccountancy - XI
*7,06,7S0
Ihe profit of the firm for the year ended 31-3-2019 before allowing interest on Geeta's loan was
Prepare Profit and Loss Appropriation Account. [Board Qiestion
ns. Profit and Loss Appropriation Account
D. for the year ended 31st March, 2013
Particulars Amount () Particulars Amount ()
By Profit 7,06,750
To Interest on Capital:
Sudha's Current A/c 54,000 Less: Interest on loan 6,750 7,00,0
Naresh's Current A/c 36,000 By Interest on Drawings:
Sudha's Current A/c 9,000
Geeta's Current Ac 18,000 1,08,000
Naresh's Current A/c 9,000
ToSalary: 4,200
Sudha's Current A/c 3,60,000
Geeta's Current A/c 22,200
Naresh's Current Ae 1,60,000 5,20,000
To Proft transferred to:
Partner's Current A/c:
Sudha 47,100
Naresh 28,260
Geeta 18,840 94,200
7,22,200 7,22,200

Working Notes:
Calculation of Interest on Drawings:
4.5 12
Sudha = 2,00,000 x =79,000
12 100
9 12
Naresh =1,00,000 x =79,000
12 100
3 12
Geeta = 1,40,000 x X
=4,200
12 100

Long Answer Type Questions-I

135. Distinguish between fixed and fluctuating capitals.
Ans.
S.No. Points Fixed Capital Account Fluctuating Capital Account
Method Method
(1) Number of Accounts Two accounts, viz, Fixed Capital One account, viz., Capital Account
Account and Current Account are is maintained for each partner.
maintained for each partner.
(1) Nature of Account/ Remains unaltered Fluctuates.
Balance
(ii) Adjustments Adiustments like interest on Adjustments are made in the
capital, drawings, interest on capital account itself.
drawings, etc. are made in the
current accounts.

(iv) Appearance in the Both capital and current accounts Only capital account appears.
Balance Sheet appear.
(v) Specific mention It should be specifically mentioned Not necessary.
in the partnership deed.
(vi) Credit/Debit balance Fixed capital accounts always Fluctuating capital account may
show a credit balance. sometimes show a debit balance.
 95
Fundamentals9
Firms:
Accounting for Partnership
136,Moli, Bhola and Raj were partners in a in the ratio of 3:3:4.
Their
partnership
(i) Interest ondeed provided for the firm sharing profits
following:
and losses

(ii) Interest on capital 5% p.a.

(iii))Interest on drawings ©12% p.a.
partner's
(iv) Moli was allowed anloan @6%salary
annual p.a. of 4,000: Bhola was alloweda commission of 10% of net profit
all
as shown by Profit and of 1,50,000 after making
Loss
the adjustments as provided Account and Raj was guaranteed a
a profit
in the partnership 2016 Bhola
Their fixed capitals were Moli agreement.
Bhola 8,00,000 and Raj 4,00,000. On 1t April,March, 2017
extended a loan of 1,00,000 to the5,00,000;
firm. The net profit of the firm for the year
ended 319t
before interest on Bhola's loan was
R3,06,000. year ended 31st March,
Prepare Profit and Loss Appropriation Account of Moli, Bhola and Raj for the
end of each month,
Moli
2017 and their Current Accounts that Bhola withdrew 5,000 at the
half year.
withdrew 10,000 at the end of eachassuming
quarter and Raj withdrew R40,000 at the
end of each
[Board Question]

Ans. Profit &Loss Appropriation Account Cr.

Dr.
for the year ended 31st March, 2017 Amount ()
Particulars Amount () Particulars
3,00,000
To Interest on Capital: By Profit and Loss A/c
Moli's Current A/c 25,000 (3,06,000-6,000)
Bhola's Current A/c 40,000 By Interest on Drawings:
Moli's Current A/c 1,800
Raj's Current A/c 20,000 85,000
Bhola's Current A/c 3,300
To Salary A/c (Moli) 4,000
Raj's Current A/c 2,400 7,500
To Commission A/c (Bhola) 30,000
To Profit transferred to:
Moli's Current A/c 56,550
Less: To Raj (37,300) 19,250
Bhola's Current A/c 56,550
Less: To Raj (37,300) 19,250
Raj's Current A/c 75,400
Add: From Moli 37,300
Add: From Bhola 37,300 1,50,000
3,07,500 3,07,500
Partners' Current Accounts Cr.
Dr.
Particulars Moli Bhola Raj Particulars Moli Bhola Raj
() () (?) () ) )
To Drawing's A/c 40,000 60,000 80,000 By Interest on CapitalA/c 25,000 40,000 20,000
To Interest on By Salary AJc 4,000
Drawings A/c 1,800 3,300 2,400 By Commission A/c 30,000
To Balance c/d 6,450 25,950 87,600 By Profit &Loss
48,250
Appropriation A/c 19,250 19,250 1,50,000
89,250 1,70,000
48,250 89,250 1,70,000
127 When and why is a Proht and LoSS
oGt and loss Appropriation acCountAppropriation
is an
Account prepared?
hedistributions payable to the extension of Profit and Loss account. All the
partners as appropriations
ount is credited with the amount of net per partnership deed are recorded in this account.
profit and debited with the amount of
net loss.
 Ans.
Aayush
138.
and 96

Normal
profits. into (ii) (i) The (iv) Salary, |
(i) (ii) (i) The CBSE
Capital partnership Interest
Distribution Distribution Question
creditTransfer Interest debit
Average
Rate
Goodwill Investment onside Fees, onside Bank
of Aarushi to
Reserves
of of
CapitalAccountancy
Return net for drawings of Commission,of this
profit loss thisprofit
to Normal 1/4th are account
be or was among account
brought Average partners
share.
of among -
Capital XII
10%. the
Naveen's partners. records: Bonus, records:
Normal Rate Goodwill of partners
Super Calculate firmsharing
by Goodwill Employed of Net
Naveen Return was etc.
share = Profit Profit Profit
20,000. profits
=745,000
=15,000 =15,000
3x=20,000 =
=20,000
the the
=R45,000 =5,000 =50,000 10%
=
4 1 Super Average
= xCapital = 50,000
amount firm
Capital and
Profit waslosses
x Profit- 100Employed of
10
=11,250. x Goodwill
investment to
Number =5,000 be in
Normal valued the
x ratio
Normal
premium
of Profit in at
Years' ththree
e 3:2.of
Rate
100 business
of of
brought years'They
purchase Return
Question
|Board purchase admitted
was
by
Naveen.
<50,000
of
Naver
sUDe