### Exercise 2.80

**Question 1**

**In the absence of Partnership Deed, what are the rules relation to :a Salaries of partners,b Interest on partners’ capitalsc Interest on partners’ loand Division of profit, ande Interest on partners’ drawings**

**Solution 1**

In the absence of Partnership Deed, the provisions of Indian Partnership Act, 1932 are applicable. Accordingly,

- a. No Salary is to be allowed to a partner
- b. No Interest on Partner’s Capital is to be allowed
- c. Interest on Partner’s Loan to be allowed at 6% p.a.
- d. Distribution of Profit to be done in equal ratio
- e. No Interest on Partner’s Drawings to be charged

**Question 2**

**Following differences have arisen among P, Q and R. State who is correct in each case:a P used 20,000 belonging to the firm and made a profit of 5,000. Q and R want the amount to be given to the firm?b Q used 5,000 belonging to the firm and suffered a loss of 1000. He wants the firm to bear the loss?c P and Q want to purchase goods from A Ltd., R does not agree?d Q and R want to admit C as partner, P does not agree?**

**Solution 2**

**a. **P is bound to pay Rs.20,000 along with profit of Rs.5,000 to the firm. This is beacuse this because this amount belongs to the firm and according to the principal and agent relationship, P is principal as well as agent to the firm, to Q and to R. And as per the rule, any profit earned by an agent (P) by using the firm’s property is attributable to the firm.

**b. **Q is liable to pay Rs.5,000 to the firm. This is beacuse, as per the Partnership Act, every partner of a partnership firm is liable to the firm for any loss caused by his/her wilful negligence which is clearly evident from the fact that he used the property of the firm and also mis-represented himself as a principal rather than an agent to the other partners and to the firm.

**c. **As per the Partnership Act, 1932, a partner has a right to buy and sell goods without consulting the other partners unless a Public Notice has been given by the partnership firm to restrict the partners to buy and sell. Accordingly, P and Q may buy goods from A Ltd.

**d. **No, C will not be admitted as one of the partners, P, has not agreed to admit C. And as per the Partnership Act, 1932 a new partner cannot be admitted into a firm unless all the existing partners agree on the same decision.

### Exercise 2.81

**Question 3**

**Solution 3**

Disputes | Possible Judgements | |

a. | A wants that interest on capital should be allowed to the partners, but B and C do not agree. | According to the Partnership Act, no interest on capital will be allowed as there is no partnership agreement among A, B and C mentioning payment of interest on capital. |

b. | B wants that the partners should be allowed to draw salary, but A and C do not agree. | No salary will be allowed to any partner until and unless there is anagreement to the contrary. |

c. | C wants that the loan given by him to the firm should bear interest @ 10% p.a., but A and B do not agree. | Interest on C’s loan will be allowed at 6% p.a. in the absence of a partnership agreement mentioning the said amount of interest. |

d. | A and B having contributed larger amounts of capital, desire that the profits should be divided in the ratio of their capital contribution, but C does not agree. | Profit will be shared equally if there is no agreement between the partners mentioning such distribution. |

**Question 4**

**Solution 4**

In case there is no partnership deed entered between partners or if deed is silent on few of the aspects, then the provisions of Indian Partnership Act, 1932 are applicable. According to the Act, if there is no agreement regarding the ratio in which profits are to be shared, then profits (or losses) are to be shared equally among all the partners. Accordingly, Jaspal’s view over distribution of profits in the capital ratio is not acceptable, and Rosy should convince Jaspal stating the provisions contained in the Partnership Act, 1932.

**Question 5**

**Solution 5**

**Harshad**** Claims:**

i. It cannot Claim interest on capital to Indian Partnership Act 1932, he is entitled only for 6% interest on loan.

ii. In absence to any agreement profit are distributed equally, according to Indian Partnership Act 1932.

**Dhiman**** Claims:**

i. It will be accepted, according to Indian Partnership Act 1932.

ii. He is not entitled for any remuneration because there is no agreement on matter of remuneration.

iii. It is no interest on capital is allowed whereas 6% interest for loan should be given.

**Distribution Profits:**

Profit and Loss Adjustment Account | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Interest on Partner’s Loan A/c | By Profit and Loss A/c | 1,80,000 | |||

Harshad [1,00,000 ×(6/100)× (6/12)] | 3,000 | ||||

To Profit and Loss Appropriation A/c | 1,77,000 | ||||

1,80,000 | 1,80,000 | ||||

Profit and Loss Appropriation Account | ||||||

Dr | Cr | |||||

Particulars | Rs. | Particulars | Rs. | |||

To Profit transferred to : | By Profit and Loss Adjustment A/c | 1,77,000 | ||||

Harshad’s Capital A/c | 88,500 | |||||

Dhiman’s Capital A/c | 88,500 | |||||

1,77,000 | 1,77,000 | |||||

**Question 6**

**Solution 6**

Profit and Loss Appropriation Accountfor the year ended March 31, 2019 | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Interest on A’s Loan A/c | 240 | By Profit b/d (before Interest) | 15,000 | ||

To Profit transferred to : | |||||

A’s Capital A/c | 7,380 | ||||

B’s Capital A/c | 7,380 | 14,760 | |||

15,000 | 15,000 |

**Working notes :**

**1**. **Calculation of interest on Loan**

Interest on loan to be provided at 6% p.a.

Amount of Loan = Rs.8,000

Period (from October 01 to March 31) = 6 Months

**2**. **Calculation of Profit Share of each partner**

Equal distribution of profits

Profit after Interest on A’s loan = Rs.15,000 – Rs.240 = Rs.14,760

**Question 7**

**Solution 7**

Total amount advanced by the partners = Rs.30,000

Profit sharing ratio = 3 :2

Interest Period (from Oct. 01, 2018 to Mar. 31, 2019) = 6 months

Interest rate = 6% p.a.

**Calculation of Interest on Advances**

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

### Exercise 2.82

**Question 8**

**Solution 8**

**Calculation of Interest on Loan for 6 months**

Case 1 – When Profits before Interest amounted to Rs.21,000 | |||||||

Profit and Loss Appropriation Accountfor the year ended March 31, 2019 | |||||||

Dr | Cr | ||||||

Particulars | Rs. | Particulars | Rs. | ||||

To Interest on X’s Loan A/c | 2,400 | By Profit b/d (before interest) | 21,000 | ||||

To Interest on Y’s Loan A/c | 1,200 | ||||||

To Profit transferred to | |||||||

X’s Capital A/c (17,400 × 2/5) | 6,960 | ||||||

Y’s Capital A/c (17,400 × 3/5) | 10,440 | 17,400 | |||||

21,000 | 21,000 | ||||||

Case 2 – When Profits before Interest amounted to Rs.3,000 | |||||

Profit and Loss Appropriation Accountfor the year ended March 31, 2019 | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Interest on X’s Loan A/c | 2,400 | By Profit b/d (before interest) | 3,000 | ||

To Interest on Y’s Loan A/c | 1,200 | By Loss transferred to- | |||

X’s Capital A/c (600 ×2/5) | 240 | ||||

Y’s Capital A/s (600 × 3/5) | 360 | 600 | |||

3,600 | 3,600 |

Case 3 – When Profits before Interest amounted to Rs.5,000 | |||||

Profit and Loss Appropriation Accountfor the year ended March 31, 2019 | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Interest on X’s Loan A/c | 2,400 | By Profit b/d (before interest) | 5,000 | ||

To Interest on Y’s Loan A/c | 1,200 | ||||

To Profit transferred to | |||||

X’s Capital A/c (1400 × 2/5) | 560 | ||||

Y’ Capital A/c (1400 × 3/5) | 840 | 1,400 | |||

5,000 | 5,000 |

Case 4 – When Losses before Interest were Rs.1,400 | |||||

Profit and Loss Appropriation Accountfor the year ended March 31, 2019 | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Loss b/d (before interest) | 2,400 | By Loss transferred to: | |||

To Interest on X’s Loan A/c | 1,200 | X’s Capital A/c (1400 × 2/5) | 2,000 | ||

To Interest on Y’s Loan A/c | 1,400 | Y’ Capital A/c (1400 × 3/5) | 3,000 | 5,000 | |

5,000 | 5,000 |

**Question 9**

**Solution 9**

Profit and Loss Appropriation Accountfor the year ended March 31, 2019 | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Loss b/d (before interest) | 9,000 | By Loan transferred to : | |||

To Interest on Bat’s Loan A/c | 7,200 | Bat’s Capital A/c | 31,920 | ||

To Interest on Ball’s loan A/c | 3,600 | Ball’s Capital A/c | 47,880 | 79,800 | |

To Rent A/c (Bat’s) | 60,000 | ||||

79,800 | 79,800 |

**Working notes :**

**1.** **Interest on Partner’s Loan**

**3.Distribution of Loss to the Partners**

**Question 10**

**Solution 10**

Profit and Loss Appropriation Account | ||||

Dr. | Cr. | |||

Particulars | Rs. | Particulars | Rs. | |

To Interest on Capital: | By Profit and Loss (Net Profit) | 80,000 | ||

—–A’s A/c (6% of 1,00,000) | 6,000 | |||

—–B’s A/c(6% of 60,000) | 3,600 | 9,600 | ||

To Salary to B’s A/c (3,000 × 12) | 36,000 | |||

To Profit transferred to : | ||||

—-A’s Capital A/c | 17,200 | |||

—-B’s Capital A/c | 17,200 | 34,400 | ||

80,000 | 80,000 |

**Working Notes** :

**WN 1 **Calculation of Profit Share of each Partner

Divisible Profit = 80,000 – 9,600 – 36,000 = 34,400

**Question 11**

**Solution 11**

Profit and Loss Appropriation Account | ||||

Dr. | Cr. | |||

Particulars | Rs. | Particulars | Rs. | |

To Interest on Capital A/c | ByProfit and Loss A/c | 4,00,000 | ||

—-X (10% of 5,00,000) | 50,000 | —- (Net Profit after Z’s salary ) | ||

—-Y (10% of 5,00,000) | 50,000 | |||

—-Z (10% of 2,50,000) | 25,000 | 1,25000 | ||

To Profit transferred to : | ||||

—-X’s Capital A/c | 1,10,000 | |||

—-Y’s Capital A/c | 1,10,000 | |||

—-Z’s Capital A/c | 55,000 | 2,75,000 | ||

4,00,000 | 4,00,000 |

**Working Notes** :

**1. ** Salary to Z will not be debited to Profit and Loss Appropriation Account as Profit of Rs.4,00,000 is already given after adjusting the Z’s salary.

**2. Calculation of Profit Share of each Partner**

Divisible of Profit after Interest on Capital = Rs.4,00,000 – Rs.1,25,000 = Rs. 2,75,000

Profit sharing ratio = 2 : 2: 1

**Question 12**

**Solution 12**

Profit and Loss Adjustment Account | |||

Dr. | Cr. | ||

Particulars | Rs. | Particulars | Rs. |

To Manager’s Commission A/c(3,00,000 × 5%) | 15,000 | By Profit and Loss A/c(Net Profit after Y’s salary) | 2,40,000 |

To Profit transferred to Profit and Loss Appropriation A/c: | 2,85,000 | By Y’s salary A/c | 60,000 |

3,00,000 | 3,00,000 |

Profit and Loss Appropriation Account | ||||

Dr. | Cr. | |||

Particulars | Rs. | Particulars | Rs. | |

To Salary to Y’s A/c | 60,000 | By Profit and Loss Adjustment A/c (After manager’s commission) | 2,85,000 | |

To Interest on Capital A/c | ||||

—-X | 40,000 | |||

—-Y | 30,000 | 70,000 | ||

To Profit transferred to : | ||||

—-X’s Capital A/c | 93,000 | |||

—-Y’s Capital A/c | 62,000 | 1,55,000 | ||

2,85,000 | 2,85,000 |

**Working Notes** :

**1. Calculation of Manager’s Commission**

Profit to calculate Managers’ Commission = 2,40,000 + 60,000 (Y’s Salary) = Rs.3,00,000

**2.** **Calculation of Interest on Capital**

**3.** **Calculation of Profit Share of each Partner**

Profit available for distribution = 2,85,000 – 60,000 – 70,000 = Rs.1,55,000

**Question 13**

**Solution 13**

Profit and Loss Appropriation Account | |||||

Dr. | Cr. | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Salary to Prem(2,500 × 12) | 30,000 | By Profit and Loss A/c(Net Profit) | 90,575 | ||

To Commission to Manoj | 10,000 | By Interest on Drawings A/c: | |||

To Interest on Capital A/c: | —-Prem | 1,250 | |||

—-Prem (5% of 2 Lacs) | 10,000 | —-Manoj | 425 | 1,675 | |

—-Manoj (5% of 1.50 Lacs) | 7,500 | 17,500 | |||

To Profit transferred to: | |||||

—-Prem’s Capital A/c | 20,850 | ||||

—-Manoj’s Capital A/c | 13,900 | 34,750 | |||

92,250 | 92,250 |

**Working Notes** :

**Calculation of Profit Share of each Partner**

Profit available for distribution = 90,575 + 1,675 – 30,000 -10,000 – 17,500 = Rs.34,750

Profit Sharing Ratio = 3 : 2

### Exercise 2.83

**Question 14**

**Solution 14**

Profit and Loss Appropriation Accountfor the year ended 31^{st} March 2019 | |||||

Dr. | Cr. | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Profit and Loss A/c (Loss) | 1,00,000 | By Interest on Drawings A/c: | |||

—- Reema | 3,000 | ||||

—- Seema | 3,000 | 6,000 | |||

By Net Loss transferred to: | |||||

—- Reema Capital A/c | 47,000 | ||||

—- Seema Capital A/c | 47,000 | 94,000 | |||

1,00,000 | 1,00,000 |

**Working Notes** :

1. Calculation of Interest on drawings of each Partner

In the no given of dates of drawings, interest thereon has been calculated for the average period.

2. Loss share of each partner Ratio 1:1.

3. Interest on capital is charge against profit.

**Question 15**

**Solution 15**

Profit and Loss Appropriation Accountfor the year ended 31^{st} March 2019 | |||||

Dr. | Cr. | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Profit and Loss A/c (Loss) | 60,000 | By Interest on Drawings A/c: | |||

(1,20,000 – 1,80,000) | —- Bhanu Current A/c | 3,750 | |||

—- Partap Current A/c | 7,500 | 11,250 | |||

By Net Loss transferred to: | |||||

—- Bhanu Current A/c | 24,375 | ||||

—- Partap Current A/c | 24,375 | 48,750 | |||

60,000 | 60,000 |

**Working Notes:**

**1. ****Calculation of Interest on Drawing of each partner**

In the no given of dates of drawings, interest thereon has been calculated for the average period.

**2. ****Calculation of Interest on Capital of each partner**

Interest on Capital is a charge against Profit. Thus, will be debited to Profit and Loss Account

Total interest = Rs.1,80,000

**Question 16**

**Solution 16**

Journal Entries | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

Profit and Loss Appropriation A/c | Dr. | 40,000 | |||

—-To Amar’s Current A/c | 15,000 | ||||

—-To Bimal’s Current A/c | 25,000 | ||||

(Being interest on capital transferred to Profit and Loss Appropriation Account) |

**Working Notes** :

**Calculation of Interest on Capital :**

**Question 17**

**Solution 17**

Journal Entries | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

Profit and Loss Appropriation A/c | Dr. | 1,00,000 | |||

—-To Kamal’s Current A/c | 55,000 | ||||

—-To Kapil’s Current A/c | 45,000 | ||||

(Being interest on capital transferred to Profit and Loss Appropriation Account) |

Profit and Loss Appropriation Accountyear ended 31^{st} March 2019 | ||||

Dr. | Cr. | |||

Particulars | Rs. | Particulars | Rs. | |

To Interest on Capital | By Profit and Loss A/c | 6,00,000 | ||

—-Kamal A/c | 55,000 | |||

—-Kapil A/c | 45,000 | 1,00,000 | ||

To Profit transferred to: | ||||

—-Kamal’s Capital A/c | 2,50,000 | |||

—-Kapil’s Capital A/c | 2,50,000 | 5,00,000 | ||

6,00,000 | 6,00,000 |

**Working Notes** :

**Calculation of Interest on Capital:**

**Question 18**

**Solution 18**

Journal Entries | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

Profit and Loss Appropriation A/c | Dr. | 20,000 | |||

—-To Simran’s Current A/c | 10,000 | ||||

—-To Reema’s Current A/c | 10,000 | ||||

(Being interest on capital transferred to Profit and Loss Appropriation Account) | |||||

Profit and Loss Appropriation A/c | Dr. | 2,80,000 | |||

—-To Simran’s Current A/c | 1,68,000 | ||||

—-To Reema’s Current A/c | 1,12,000 | ||||

(Being profit transferred to Partners Current Account) |

Profit and Loss Appropriation Accountyear ended 31^{st} March 2019 | ||||

Dr. | Cr. | |||

Particulars | Rs. | Particulars | Rs. | |

To Interest on Capitals: | By Profit and Loss A/c | 3,00,000 | ||

—-Simran’s A/c | 10,000 | |||

—-Reema’s A/c | 10,000 | 20,000 | ||

To Profit transferred to : | ||||

—-Simran’s Current A/c | 1,68,000 | |||

—-Reema’s Current A/c | 1,12,000 | 2,80,000 | ||

3,00,000 | 3,00,000 |

**Working Notes** :

**Calculation of Interest on Capital**

**Question 19**

**Solution 19**

Journal Entries | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

Profit and Loss Appropriation A/c | Dr. | 90,000 | |||

—-To Anita’s Current A/c | 50,000 | ||||

—-To Ankita’s Current A/c | 40,000 | ||||

(Being interest on capital transferred to Profit and Loss Appropriation Account) |

**Working Notes** :

**Calculation of Interest on Capital**

### Exercise 2.84

**Question 20**

**Solution 20**

Journal Entries | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

Profit and Loss Appropriation A/c | Dr. | 1,35,000 | |||

—-To Ashish’s Capital A/c | 65,000 | ||||

—-To Aakash’s Capital A/c | 70,000 | ||||

(Being interest on capital transferred to Profit and Loss Appropriation Account) | |||||

Profit and Loss Appropriation A/c | Dr. | 3,65,000 | |||

—-To Ashish’s Capital A/c | 2,19,000 | ||||

—-To Aakash’s Capital A/c | 1,46,000 | ||||

(Being profit transferred to Partners Capital Account) |

Profit and Loss Appropriation Accountyear ended 31^{st} march 2019 | ||||

Dr. | Cr. | |||

Particulars | Rs. | Particulars | Rs. | |

To Interest on Capitals: | By Profit and Loss A/c | 5,00,000 | ||

—-Ashish’s A/c | 65,000 | |||

—-Aakash’s A/c | 70,000 | 1,35,000 | ||

To Profit transferred to : | ||||

—-Ashish’s Capital A/c | 2,19,000 | |||

—-Aakash’s Capital A/c | 1,46,000 | 3,65,000 | ||

5,00,000 | 5,00,000 |

**Working Notes** :

**Calculation of Opening Capital:**

Particulars | Ashish | Aakash |

Capital at the end | 5,00,000 | 6,00,000 |

Add: Drawings | 1,50,000 | 1,00,000 |

Opening Capital | 6,50,000 | 7,00,000 |

**2.** **Calculation of Interest on Capital**

**Question 21**

**Solution 21**

Journal Entries | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

Profit and Loss Appropriation A/c | Dr. | 82,500 | |||

—-To Naresh’s Capital A/c | 42,500 | ||||

—-To Sukesh’s Capital A/c | 40,000 | ||||

(Being interest on capital transferred to Profit and Loss Appropriation Account) | |||||

Profit and Loss Appropriation A/c | Dr. | 1,17,500 | |||

—-To Naresh’s Capital A/c | 58,750 | ||||

—-To Sukesh’s Capital A/c | 58,750 | ||||

(Being profit transferred to Partners Capital Account) |

**Working Notes** :

**1.**

**Calculation of Opening Capital:**

Particulars | Naresh | Sukesh |

Capital at the end | 3,00,000 | 3,00,000 |

Add: Out of Capital Drawings | 50,000 | —– |

Add: Against Profit Drawings | 1,00,000 | 1,00,000 |

Opening Capital | 4,50,000 | 4,00,000 |

**2.**

**Calculation of Interest on Capital:**

Question 22

Q 22Solution 22

Profit and Loss Appropriation Accountyear ended 31^{st} march 2014 | ||||

Dr. | Cr. | |||

Particulars | Rs. | Particulars | Rs. | |

To Interest on Capitals: | By Profit and Loss A/c | 7,800 | ||

—-Jay A/c | 4,800 | |||

—-Vijay A/c | 3,000 | 7,800 | ||

7,800 | 7,800 |

**Working Notes** :

**1.**

**Calculation of Interest on Capital**

**2.**

**Calculation of Proportionate Interest on Capital**

Question 23

Q 23Solution 23

Profit and Loss Appropriation Account | ||||

Dr. | Cr. | |||

Particulars | Rs. | Particulars | Rs. | |

To Salary A/c | By Profit and Loss A/c | 4,80,000 | ||

—-Amar | 1,20,000 | |||

—-Bhanu | 1,20,000 | 2,40,000 | ||

To Profit transferred to : | ||||

—-Amar’s Capital A/c | 80,000 | |||

—-Bhanu’s Capital A/c | 80,000 | |||

—-Charu’s Capital A/c | 80,000 | 2,40,000 | ||

4,80,000 | 4,80,000 |

Question 24

Q 24 Solution 24

Net Profit for the year= Rs.1,10,000

Commission to A = 10% of on Net Profit

Question 25

Q 25 Solution 25

Net Profit before charging Commission = 2,20,000

Commission to Z = 10% of on Net Profit after charging such commission

Question 26

Q 26Solution 26

Profit and Loss Appropriation Accountfor the year ended March 31, 2019 | ||||||

Dr | Cr. | |||||

Particulars | AmountRs. | Particulars | Amount Rs. | |||

To Partner’s Commission | By Profit and Loss A/c | 1,80,000 | ||||

A’s A/c | 6,000 | (Net Profit) | ||||

B’s A/c | 9,000 | |||||

C’s A/c | 6,000 | |||||

D’s A/c | 9,000 | 30,000 | ||||

To Profit transferred to : | ||||||

A’s Capital A/c | 60,000 | |||||

B’s Capital A/c | 45,000 | |||||

C’s Capital A/c | 30,000 | |||||

D’s Capital A/c | 15,000 | 1,50,000 | ||||

1,80,000 | 1,80,000 | |||||

**Working Notes :**

**1.**

**Calculation of Partner’s Commission**

Partners Commission = 20 % On Net Profit after charging such commission

This Commission is to be shared by the partners in the ratio of 2 : 3 : 2 : 3

**2.**

**Calculation of Profit Share of each Partner**

Profit available for Distribution = 1,80,000 – 30,000 = Rs.1,50,000

Profit sharing ratio = 4 : 3 : 2 : 1

### Exercise 2.85

**Question 27**

**Solution 27**

Profit and Loss Appropriation Accountfor the year ended March 31, 2019 | |||||

Dr. | Cr. | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Partner’s Salary A/c | By Profit and Loss A/c | 4,20,000 | |||

X (10,000 × 12) | 1,20,000 | —- (Net Profit) | |||

Y | 25,000 | 1,45,000 | |||

To Partner’s Commission | |||||

X’s A/c | 27,500 | ||||

Y’s A/c | 22,500 | 50,000 | |||

To Profit transferred to : | |||||

X’s Capital A/c | 1,12,500 | ||||

Y’s Capital A/c | 1,12,500 | 2,25,000 | |||

4,20,000 | 4,20,000 |

**Working Notes :**

**1.**

**Calculation of Commission**

Commission to X = 10% of Net Profit after partner’s salaries but before charging such commission Profit after Partner’s Salaries = Rs.4,20,000 – Rs.1,45,000 = Rs.2,75,000

Commission to Y = 10% of Net Profit after charging Commission and Partner’s Salaries

Profit after commission and partner’s salaries = Rs.4,20,000 – Rs.1,45,000 – Rs.27,500 = Rs.2,47,500

**2.**

**Calculation of Profit Share of each Partner**

Profit available for distribution = Rs.4,20,000 – Rs.1,45,000 – Rs.50,000 = Rs.2,25,000

Profit sharing ratio = 1 : 1

Question 28

Q 28Solution 28

Date of drawings made by the partners is not given. Therefore, interest on drawings is calculated on average basis for a period of six months.

Question 29

Q 29Solution 29

Drawings are made evenly at the middle of every month, therefore, interest on drawings is calculated for a period of six months.

Question 30

Q 30Solution 30

Question 31

Q 31Solution 31

Question 32

Q 32Solution 32

Question 33

Q 33Solution 33

Total Drawings = 7,500 × 4 = Rs.30,000

Interest Rate = 10% p.a.

**Case (a)**

If equal amount is withdrawn in the beginning of each quarter:

Interest on drawings would be calculated for an average period of 7.5 months

**Case (b)**

If equal amount is withdrawn at the end of each quarter:

Interest on drawings would be calculated for an average period of 4.5 months

**Case (c)**

If equal amount is withdrawn in the middle of each quarter:

Interest on drawings would be calculated for an average period of 6 months

Question 34

Q 34Solution 34

Interest on Kanika’s Drawings = Rs.1,500

Interest on Gautam’s Drawings = Rs.2,250

**Working Notes** :

**1**.

**Calculation of Interest on Kanika’s Drawings**

By Product Method | |||

Date | Rs. (I) | Months(II) | Product(I × II) |

Apr. 01 | 10,000 | 12 | 1,20,000 |

June 01 | 9,000 | 10 | 90,000 |

Nov. 01 | 14,000 | 5 | 70,000 |

Dec. 01 | 5,000 | 4 | 20,000 |

Sum of Product | 3,00,000 |

**2**.

**Calculation of Interest on Gautam’s Drawings**

Gautam withdrew Rs. 15,000 in the beginning of every quarter.

## Exercise 2.86

Question 35

Q 35Solution 35

**Calculation of Interest on A’s Capital**

Date | Capital | × | Period | = | Product |

April 01, 2018 to June 30, 2018 | 50,000 | × | 3 | = | 1,50,000 |

July 01, 2018 to March 31, 2019 | 60,000 | × | 9 | = | 5,40,000 |

Sum of Product | 6,90,000 |

**Calculation of Interest on B’s Capital**

Date | Capital | × | Period | = | Product |

April 01, 2018 to June 30, 2018 | 40,000 | × | 3 | = | 1,20,000 |

July 01, 2018 to March 31, 2019 | 41,000 | × | 9 | = | 3,69,000 |

Sum of Product | 4,89,000 |

Question 36

Q 36Solution 36

Interest on capital is calculated on the opening balance of partner’s capital.

**Calculation of Capital balance at the beginning**

Particulars | Ram | Mohan |

Capital at the end | 24,000 | 18,000 |

Less : Profit already credited | (8,000) | (8,000) |

(1 : 1) | ||

Add : Drawings already debited | 4,000 | 6,000 |

Capital at the beginning | 20,000 | 16,000 |

Question 37

Q 37Solution 37

**Calculation of Interest on Capital**

Note: In this question, as the balances of both Partner’s Capital Account and of Partner’s Current Account are mentioned, so it has been assumed that the capital of the partners is fixed.

As we know, when the capital of the partners is fixed, drawings and interest on capital does not affect the capital balances of the partners. Rather, it would affect their current account balances. Therefore, in this case, capital at the beginning (i.e. opening capital) and capital at the end (i.e. closing capital) of the year would remain same.

Thus, the interest on capital is calculated on fixed capital balances (given in the Balance Sheet of the question).Question 38

Q 38Solution 38

Calculation of Capital at the beginning (as on April 01, 2018) | |||

Particulars | LongRs. | ShortRs. | |

Capital at the end | 1,20,000 | 1,40,000 | |

Less : Adjusted Profit (1,50,000 – 1,00,000) in 1 : 1 ratio | (25,000) | (25,000) | |

Add : Adjusted Drawings | 40,000 | 50,000 | |

Capital in the beginning | 1,35,000 | 1,65,000 |

Question 39

Q 39Solution 39

**Calculation of Interest on Capital**

**Case (a)**

Where there is no clean agreement except for interest on capitals

Profit for the year ended = Rs.1,500

Total amount of interest = Rs.1,800

Here, Interest on capital > the profits available for distribution. Therefore, profit of Rs. 1,500 is distributed between X and Y in the ratio of their interest on capital.

Particulars | X | : | Y |

Interest on Capital or | 1,200 | : | 600 |

Ratio of interest on Capital | 2 | : | 1 |

**Case (b)**

In case, there is an agreement that the interest on capital as a charge., then the whole amount of interest on capital is to be allowed to the partners.

Total Profit of the firm = Rs.1,500

Total amount of Interest on Capital = Rs.1,800 (i.e. Rs.1,200 + Rs.600). Therefore, loss to the firm amounts to Rs. 300. This loss is to be shared by Moli and Bholi in their profit sharing ratio that is 2:3.

Question 40

Q 40Solution 40

**Calculation of Interest on Amit’s Capital**

Date | Capital | × | Period | = | Product |

April 01, 2018 to Sept 30, 2018 | 15,00,000 | × | 6 | = | 90,00,000 |

Oct. 01, 2018 to March 31, 2019 | 12,00,000 | × | 6 | = | 72,00,000 |

Sum of Product | 1,62,00,000 |

**Calculation of Interest on Bramit’s Capital**

Date | Capital | × | Period | = | Product |

April 01, 2018 to Sept 30, 2018 | 9,00,000 | × | 6 | = | 54,00,000 |

Oct. 01, 2018 to March 31, 2019 | 12,00,000 | × | 6 | = | 72,00,000 |

Sum of Product | 1,26,00,000 |

## Exercise 2.87

Question 41

Q 41 Solution 41

**Case A: Interest on Capital, (If Capitals are Fixed):**

**Case B: Interest on Capital, (If Capitals are Fluctuating):**

**Working Notes:**

**WN 1: Calculation of Opening Capital (When Capitals were Fixed)**

Particulars | Simrat | Bir |

Capital at the end | 4,80,000 | 6,00,000 |

Add: Drawings (out of capital) | 2,40,000 | 60,000 |

Less: Fresh Capital introduced | (1,20,000) | (3,00,000) |

Opening Capital | 6,00,000 | 3,60,000 |

**WN 2: Calculation of Opening Capital (When Capitals are Fluctuating)**

Particulars | Simrat | Bir |

Capital at the end | 4,80,000 | 6,00,000 |

Add: Drawings (out of capital) | 2,40,000 | 60,000 |

Add: Drawings (out of profits) | 1,20,000 | 60,000 |

Less: Fresh Capital introduced | (1,20,000) | (3,00,000) |

Less: Profit already credited | (1,44,000) | (96,000) |

Opening Capital | 5,76,000 | 3,24,000 |

Question 42

Q 42 Solution 42

Profit and Loss Appropriation Accountfor the year ended March 31, 2019 | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Interest on Capital A/c | By Profit and Loss A/c | 80,000 | |||

C | 6,000 | —-(Net Profit) | |||

D | 3,600 | 9,600 | |||

To Salary to D A/c (3,000 × 12) | 36,000 | ||||

To Profit transferred to : | |||||

C’s Capital A/c | 17,200 | ||||

D’s Capital A/c | 17,200 | 34,400 | |||

80,000 | 80,000 |

**Working note**

**1.**

**Calculation of Interest on Capital**

**2.**

**Calculation of Profit Share of each Partner**

Profit available for distribution =Rs.80,000 – Rs.9,600 -Rs.36,000 = Rs.34,400

Total amount received by C = Interest on Capital + Profit Share =Rs.6,000 + Rs.17,200 =Rs.23,200

Total amount received by D= Interest on Capital + Salary + Profit Share

= Rs.3,600 + Rs.36,000 + Rs.17,200

= Rs.56,800Question 43

Q 43Solution 43

Profit and Loss Appropriation Account | |||||

Dr. | Cr. | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Interest on Capital A/c | By Profit and Loss A/c (Net Profit) | 2,16,000 | |||

—-Amit | 20,000 | By Interest on Drawings A/c | |||

—-Vijay | 15,000 | 35,000 | —-Amit | 2,200 | |

Salary A/c to : | —-Vijay | 2,500 | 4,700 | ||

—-Amit (2,000 × 12) | 24,000 | ||||

—-Vijay (3,000 × 12) | 36,000 | 60,000 | |||

To Profit transferred to : | |||||

—-Amit’s Capital A/c | 75,420 | ||||

—-Vijay’s Capital A/c | 50,280 | 1,25,700 | |||

2,20,700 | 2,20,700 |

**Working Notes** :

**1.**

C**alculation of Interest on Capital**

**2.**

**Calculation of Profit Share of each Partner**

Divisible Profit = 2,16,000 + 4,700 – 35,000 – 60,000 = Rs.1,25,700

Question 44

Q 44Solution 44

Partner’s Capital Account | |||||

Dr | Cr | ||||

Particulars | SohanRs. | MohanRs. | Particulars | SohanRs. | MohanRs. |

To Drawings A/c | 50,000 | 30,000 | By Balance c/d | 4,00,000 | 3,00,000 |

To Interest on Drawings A/c | 1,250 | 750 | By Interest on Capital A/c | 20,000 | 15,000 |

To Balance c/d | 4,69,750 | 3,37,250 | By P and L Appropriation A/c | 60,000 | 50,000 |

By Partner’s Salary A/c | 36,000 | – | |||

By Commission A/c | 5,000 | 3,000 | |||

5,21,000 | 3,68,000 | 5,21,000 | 3,68,000 |

Question 45

Q 45Solution 45

Profit and Loss Account | |||

Dr | Cr | ||

Particulars | Rs. | Particulars | Rs. |

To Interest on Kajal’s loan @ 6% p.a. | 1,800 | By Profit b/d | 70,260 |

To Profit transferred to P/L Appropriation A/c | 68,460 | ||

70,260 | 70,260 |

Profit and Loss Appropriation Account | |||||||

Dr | Cr | ||||||

Particulars | Rs. | Particulars | Rs. | ||||

To Interest on Capital A/c | By Profit and Loss A/c | 68,460 | |||||

Sajal | 2,500 | By Interest on Drawings A/c | |||||

Kajal | 2,000 | 4,500 | Sajal | 300 | |||

To Reserve A/c | 6,450 | Kajal | 240 | 540 | |||

To Profit transferred to : | |||||||

Sajal’s Capital; A/c | 38,700 | ||||||

Kajal’s Capital A/c | 19,350 | 58,050 | |||||

69,000 | 69,000 |

Partner’s Capital Account | |||||

Dr | Cr | ||||

Particulars | SajalRs. | KajalRs. | Particulars | SajalRs. | KajalRs. |

To Drawings A/c | 10,000 | 8,000 | By Balance b/d | 50,000 | 40,000 |

To Interest on Drawings A/c | 300 | 240 | By Interest on Capital A/c | 2,500 | 2,000 |

By P and L Appropriation A/c | 38,700 | 19,350 | |||

To Balance c/d | 80,900 | 53,110 | |||

91,200 | 61,350 | 91,200 | 61,350 |

**Working Note :**

**1.**

Calculation of Interest on Capital

**2.**

Calculation of Interest on Drawings

**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

=Rs. 68,460 + Rs.540 – Rs.4,500

= Rs.64,500

** 4.**

Calculation of Profit Share of each Partner

Profit available for Distribution

= 68,460 + 540 – 4,500 – 6,450

= Rs.58,050

Profit sharing ratio = 2:1

## Exercise 2.88

Question 46

Q 46Solution 46

Profit and Loss Appropriation AccountFor the year ended March 31, 2019 | ||||||

Dr | Cr | |||||

Particulars | Rs. | Particulars | Rs. | |||

To Interest on Capital A/c | By Profit and Loss A/c | 50,000 | ||||

A | 3,000 | — (Net Profit) | ||||

B | 1,800 | 4,800 | ||||

To B’s Salary A/c(500 × 12) | 6,000 | |||||

To Partner’s Commission A/c | ||||||

A | 6,000 | |||||

B | 1,581 | 7,581 | ||||

To Profit transferred to : | ||||||

A’s Capital A/c | 23,714 | |||||

B’s Capital A/c | 7,905 | 31,619 | ||||

50,000 | 50,000 | |||||

Partner’s Current Account | |||||

Dr | Cr | ||||

Particulars | ARs. | BRs. | Particulars | ARs. | BRs. |

To Drawings A/c | 8,000 | 6,000 | By Balance b/d | 50,000 | 30,000 |

To Balance c/d | 74,714 | 41,286 | By Interest on Capital A/c | 3,000 | 1,800 |

By Commission A/c | 6,000 | 1,581 | |||

By Salary A/c | 6,000 | ||||

By P/L Appropriation A/c | 23,714 | 7,905 | |||

82,714 | 47,286 | 82,714 | 47,286 | ||

**Working Notes :**

**1.**

**Calculation of Interest on Capital**

**2.**

**Calculation of Commission**

Commission to B = 5% on Profits after all expenses (including Commission)

Profits after all expense

= Rs.50,000 – Rs.4,800 – Rs.6,000 – Rs.6,000

= Rs.33,200

**3.**

**Calculation of Share of Profit of each Partner**

Profit available for Distribution

= Rs.50,000 – Rs.4,800 – Rs.6,000 – Rs.7,581

= Rs.31,619

Profit sharing ratio = 3 :1

Question 47

Q 47Solution 47

Profit and Loss Appropriation Account | |||||

Dr. | Cr. | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Interest on Capital | By Profit and Loss A/c (Net Profit) | 1,72,000 | |||

—–A | 5,000 | ||||

—–B | 5,000 | ||||

—–C | 10,000 | 20,000 | |||

To Salary to C A/c | 12,000 | ||||

To Profit transferred to : | |||||

—–A’s Capital A/c | 50,000 | ||||

—–B’s Capital A/c | 44,000 | ||||

—–C’s Capital A/c | 46,000 | 1,40,000 | |||

1,72,000 | 1,72,000 |

Journal Entries | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

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 | ||||

(Being Interest on partner’s capital allowed to partners) | |||||

Salary A/c | Dr. | 12,000 | |||

—–To C’s Current A/c | 12,000 | ||||

(Being 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 | ||||

(Being profit available for distribution transferred to partners’ current account) |

**Working Notes** :

**1.**

**Calculation of Interest on Capital**

**2.**

** ****Calculation of share of Profit of each Partner**

Profits available for Distribution = 1,72,000 – 20,000 – 12,000 = Rs. 1,40,000

i. Distribution of first Rs. 20,000 in the Capital ratio i.e. 1:1:2

ii. Distribution of Next Rs. 30,000 in the ratio of 5: 3: 2

iii. Remaining profit available for distribution = 1,40,000 – 20,000 – 30,000 = Rs.90,000

This profit of Rs.90,000 is to be shared equally by the partners.

Therefore,

Total Profit Share of A = 5,000 + 15,000 + 30,000 = Rs.50,000

Total Profit Share of B = 5,000 + 9,000 + 30,000 = Rs.44,000

Total Profit Share of C = 10,000 + 6,000 + 30,000 = Rs.46,000Question 48

Q 48Solution 48

Profit and Loss Account | |||

Dr | Cr | ||

Particulars | Rs. | Particulars | Rs. |

To Manager’s Commission A/c—-(5% of 15,000) | 750 | By Profit b/d (before B’s Salary)—-(12,500 + 2,500) | 15,000 |

To Profit transferred to Profit and Loss Appropriation A/c | 14,250 | ||

15,000 | 15,000 |

Profit and Loss Appropriation Account | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Interest on Capital A/c | By Profit and Loss A/c | 14,250 | |||

A | 3,000 | ||||

B | 1,800 | 4,800 | |||

To B’s Salary A/c | 2,500 | ||||

To Profit transferred to | |||||

A’s Capital A/c | 4,170 | ||||

B’s Capital A/c | 2,780 | 6,950 | |||

14,250 | 14,250 |

Partner’s Capital Account | |||||

Dr | Cr | ||||

Particulars | ARs. | BRs. | Particulars | ARs. | BRs. |

To Balance c/d | 57,170 | 37,080 | By Balance b/d | 50,000 | 30,000 |

By Interest on Capital A/c | 3,000 | 1,800 | |||

By Salary A/c | 2,500 | ||||

By PandL Appropriation A/c | 4,170 | 2,780 | |||

57,170 | 37,080 | 57,170 | 37,080 |

**Working Note :**

**1.**

**Calculation of Manager’s Commission**

Manager’s Commission = 5% on Net Profit (before Salary)

Profit before Salary = Profit after Salary + Salary = Rs.12,500 + Rs.2,500 = Rs.15,000

**2.**

**Calculation of Interest on Capital**

**3.**

**Calculation of share of profit of each Partner**

Profit available for distribution = Rs.12,500 – Rs.750 – Rs.3,000 – Rs.1,800 = Rs.6,950

Profit sharing ratio = 3 : 2

Question 49

Q 49 Solution 49

Profit and Loss Appropriation Accountfor the year ended March 31, 2019 | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Interest on capital A/c | By Profit b/d | 21,000 | |||

—–P | 2,000 | —-(after Salary) | |||

—–Q | 1,500 | ||||

—–R | 1,500 | 5,000 | |||

To Profit transferred to | |||||

—–P’s Capital A/c | 7,000 | ||||

—–Q’s Capital A/c | 5,000 | ||||

—–R’s Capital A/c | 4,000 | 16,000 | |||

21,000 | 21,000 | ||||

Partner’s Capital Account | |||||||

Dr | Cr | ||||||

Particulars | P | Q | R | Particulars | P | Q | R |

To Drawings A/c | 10,000 | 10,000 | 10,000 | By Balance b/d | 40,000 | 30,000 | 30,000 |

To Balance c/d | 39,000 | 32,500 | 29,500 | By Salaries A/c | – | 6,000 | 4,000 |

By Interest Capital A/c | 2,000 | 1,500 | 1,500 | ||||

By P/L Appropriation A/c | 7,000 | 5,000 | 4,000 | ||||

49,000 | 42,500 | 39,500 | 49,000 | 42,500 | 39,500 | ||

**Working Notes :**

**1.**

**Calculation of Interest on Capital**

**2.**

**Calculation of share of profit of each Partner**

Profit available for distribution = Rs.21,000 – Rs.5,000 =Rs. 16,000

i. Distribution of first Rs.10,000 (50% 30% and 20%)

ii. Distribution of Reaming Profits in equal ratio i.e. Rs.6,000 (Rs.16,000 – Rs.10,000)

Accordingly,

Total Profit Share of P = Rs.5,000 + Rs.2,000 = Rs.7,000

Total Profit Share of Q = Rs.3,000 + Rs.2,000 = Rs.5,000

Total Profit Share of R = Rs.2,000 + Rs.2,000 = Rs.4,000

## Exercise 2.89

Question 50

Q 50Solution 50

Profit and Loss Appropriation Account | ||||||

Dr | Cr | |||||

Particulars | Rs. | Particulars | Rs. | |||

To Interest on capital A/c | By Profit and Loss A/c | 45,000 | ||||

A | 2,500 | |||||

B | 1,500 | |||||

C | 1,000 | 5,000 | ||||

To Salary A/c to: | ||||||

B | 5,000 | |||||

C | 5,000 | 10,000 | ||||

To Profit transferred to: | ||||||

A’s Current A/c | 15,000 | |||||

B’s Current A/c | 9,000 | |||||

C’s Current A/c | 6,000 | 30,000 | ||||

45,000 | 45,000 | |||||

Partner’s Capital Account | |||||||

Dr | Cr | ||||||

Particulars | ARs. | BRs. | CRs. | Particulars | ARs. | BRs. | CRs. |

By Balance b/d | 50,000 | 30,000 | 20,000 | ||||

To Balance c/d | 50,000 | 30,000 | 20,000 | ||||

50,000 | 30,000 | 20,000 | 50,000 | 30,000 | 20,000 | ||

Partner’s Current Account | |||||||

Dr | Cr | ||||||

Particulars | ARs. | BRs. | CRs. | Particulars | ARs. | BRs. | CRs. |

To Drawings A/c | 10,000 | 7,500 | 6,000 | By Balance b/d | 4,500 | 1,500 | 1,000 |

To Balance c/d | 12,000 | 9,500 | 7,000 | By Interest on Capital A/c | 2,500 | 1,500 | 1,000 |

By Salaries A/c | – | 5,000 | 5,000 | ||||

By P/L Appropriation A/c | 15,000 | 9,000 | 6,000 | ||||

22,000 | 17,000 | 13,000 | 22,000 | 17,000 | 13,000 | ||

**Working Notes**

**1.**

**Calculation of Interest on Capital**

**2.**

**Calculation of share of profit of each Partner**

Profit available for Distribution = Rs.45,000 – Rs.15,000 = Rs.30,000

Question 51

Q 51Solution 51

Partner’s Capital Accounts | |||||

Dr | Cr | ||||

Particulars | Ali | Bahadur | Particulars | Ali | Bahadur |

To Balance c/d | 25,000 | 20,000 | By Balance b/d | 25,000 | 20,000 |

25,000 | 20,000 | 25,000 | 20,000 |

Partner’s Current Accounts | |||||

Dr | Cr | ||||

Particulars | Ali | Bahadur | Particulars | Ali | Bahadur |

To Drawings A/c | 3,500 | 2,500 | By Interest on Capital A/c | 1,250 | 1,000 |

To Balance c/d | 19,642 | 10,883 | By Bahadur’s Salary A/c | 3,000 | |

By P/L Appropriation A/c | 21,892 | 9,383 | |||

22,775 | 13,225 | 22,775 | 13,225 |

**Working Notes**

**1.**

Profit and Loss Appropriation Accountfor the year ended March 31, 2019 | ||||||

Dr | Cr | |||||

Particulars | Rs. | Particulars | Rs. | |||

To Interest on Capital A/c | By Profit and Loss A/c | 40,000 | ||||

Ali | 1,250 | |||||

Bahadur | 1,000 | 2,250 | ||||

To Reserve A/c | 3,475 | |||||

To Bahadur’s Salary A/c | 3,000 | |||||

To Profit transferred to | ||||||

Ali’s Capital A/c | 21,892 | |||||

Bahadur’s Capital A/c | 9,383 | 31,275 | ||||

40,000 | 40,000 | |||||

**2**.

**Calculation of Interest on Capital**

**3.**

**Calculation of Amount to be transferred to Reserve**

**4.**

** Calculation of share of profit of each partner**

Profit available for distribution

=Rs. 40,000 – Rs.2,250 – Rs.3,475- Rs.3,000

= Rs.31,275

Question 52

Q 52Solution 52

Profit and Loss Appropriation Accountfor the year ended March 31, 2019 | ||||||

Dr | Cr | |||||

Particulars | Rs. | Particulars | Rs. | |||

To Interest on Capital A/c | By Profit and Loss A/c | 33,360 | ||||

Amal | 2,000 | —-(Net Profit) | ||||

Bimal | 1,500 | |||||

Kamal | 1,250 | 4,750 | ||||

To Salary to Amal A/c—–(250 ×12) | 3,000 | |||||

To Commission A/c (Bimal) | 985 | |||||

To General Reserve A/c | 2,462 | |||||

To Profit transferred to : | ||||||

Amal’s Capital A/c | 7,388 | |||||

Bimal’s Capital A/c | 7,388 | |||||

Kamal’s Capital A/c | 7,387 | 22,163 | ||||

33,360 | 33,360 | |||||

Partner’s Current Account | |||||||

Dr | Cr | ||||||

Particulars | Amal | Bimal | Kamal | Particulars | Amal | Bimal | Kamal |

To Balance c/d | 52,388 | 39,873 | 33,637 | By Balance b/d | 40,000 | 30,000 | 25,000 |

By Interest on Capital A/c | 2,000 | 1,500 | 1,250 | ||||

By Salary A/c | 3,000 | – | – | ||||

By Commission | – | 985 | – | ||||

By P/L Appropriation A/c | 7,388 | 7,388 | 7,387 | ||||

52,388 | 39,873 | 33,637 | 52,388 | 39,873 | 33,637 | ||

**Working Note :**

**1.**

**Calculation of Interest on Capital**

**2.**

**Calculation of Commission to Bimal**

Commission to Bimal = 4% on Net Profits after Commission

Profit after expenses = Rs.33,360 – Rs.4,750 – Rs.3,000 = Rs.25,610

**3.**

**Calculation of Amount to be transferred to General Reserve**

Amount for General Reserve

= 10 % of Profit

**4.**

**Calculation of share of profits to each partner**

Profit available for Distribution

= Rs.33,360 – Rs.4,750 – Rs.3,000 – Rs.985 – Rs.2,462

= Rs.22,163

Question 53

Q 53Solution 53

Profit and Loss Appropriation AccountFor the year ended March 31, 2019 | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Interest on Capital A/c | By Profit and Loss A/c (Net Profit) | 5,00,000 | |||

Amit | 5,000 | ||||

Binita | 10,000 | ||||

Charu | 15,000 | 30,000 | |||

To Salary to Amit A/c (10,000 ×12) | 1,20,000 | ||||

To Commission A/c (Binita) | 23,810 | ||||

To General Reserve A/c | 50,000 | ||||

To 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 | |||

5,00,00 | 5,00,000 | ||||

Partner’s Capital Account | |||||||

Dr | Cr | ||||||

Particulars | Amit | Binita | Charu | Particulars | Amit | Binita | Charu |

To Balance c/d | 3,17,063 | 3,25,873 | 4,07,064 | By Balance b/d | 1,00,000 | 2,00,000 | 3,00,000 |

By Interest on Capital A/c | 5,000 | 10,000 | 15,000 | ||||

By Salary A/c | 1,20,000 | ||||||

By Commission | 23,810 | ||||||

By 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 Note :**

**1.**

** Calculation of Interest on Capital**

**2.**

**Calculation of Commission to Binita**

**3.**

**Calculation of Amount to be transferred to General Reserve**

Amount for General Reserve 10 % of Profit

**4.**

**Calculation of Share Profit of each Partner**

Profit available for Distribution

= Rs.5,00,000 – Rs.30,000 – Rs.1,20,000 – Rs.23,810 – Rs.50,000

= Rs.2,76,190

Question 54

Q 54Solution 54

Profit and Loss Appropriation AccountFor the year ended March 31, 2019 | ||||||

Dr. | Cr. | |||||

Particulars | Rs. | Particulars | Rs. | |||

To Interest on Capital | By Profit and Loss A/c | 5,00,000 | ||||

Anita | 5,000 | (Net Profit) | ||||

Bimla | 10,000 | |||||

Cherry | 15,000 | 30,000 | ||||

To Salary to Anita A/c (5,000 ×12) | 60,000 | |||||

To Commission A/c (Bimla) | 23,810 | |||||

To General Reserve A/c | 38,619 | |||||

To Profit transferred to : | ||||||

Anita’s Capital A/c | 1,15,857 | |||||

Bimla’s Capital A/c | 1,15,857 | |||||

Cherry’s Capital A/c | 1,15,857 | 3,47,571 | ||||

5,00,000 | 5,00,000 | |||||

Partner’s Capital Account | |||||||

Dr | Cr | ||||||

Particulars | Anita | Bimla | Cherry | Particulars | Anita | Bimla | Cherry |

To Balance c/d | 2,80,857 | 3,49,667 | 4,30,857 | By Balance b/d | 1,00,000 | 2,00,000 | 3,00,000 |

By Interest on Capital A/c | 5,000 | 10,000 | 15,000 | ||||

By Salary A/c | 60,000 | ||||||

By Commission A/c | 23,810 | ||||||

By P/L Appropriation A/c | 1,15,857 | 1,15,857 | 1,15,857 | ||||

2,80,857 | 3,49,667 | 4,30,857 | 2,80,857 | 3,49,667 | 4,30,857 | ||

**Working Note :**

**1.**

** Calculation of Interest on Capital**

**2.**

**Calculation of Commission to Bimla**

Commission to Bimla = 5% on Net Profits after Commission

**3.**

**Calculation of Amount to be transferred to General Reserve**

Amount for General Reserve 10 % of Divisible Profit

Divisible Profit** =**Rs.5,00,000 – Rs.30,000 – Rs.23,810 – Rs.60,000

= Rs.3,86,190

**4.**

**Calculation of Share of Profit of each Partner**

Profit available for Distribution

= Rs.5,00,000 – Rs.30,000 – Rs.60,000 – Rs.23,810 – Rs.38,619

= Rs.3,47,571

## Exercise 2.90

Question 55

Q 55 Solution 55

Profit and Loss Appropriation Accountfor the year ended March 31, 2019 | |||

Dr. | Cr. | ||

Particulars | Rs. | Particulars | Rs. |

To Interest on Anshul’s Capital A/c | 20,000 | By Profit and Loss A/c | 32,000 |

To Anshul’s Salary A/c | 12,000 | ||

32,000 | 32,000 | ||

**Working Note**

Salary to Asha = Rs.24,000

Total appropriation to be made = Rs.40,000 + Rs.24,000 = Rs.64,000

Profit earned during the year = Rs.32,000

Here, profit available for distribution (i.e. Rs.32,000) *is less than* the sum of total of interest on Capital and Salary (i.e. Rs.64,000)

Therefore, profit will be distributed in the ratio of interest on Capital and Salary.

Ratio of Interest on Anshul’s Capital to Asha’ Salary is 40,000 : 24,000, i.e. 5 : 3.

Question 56

Q 56 Solution 56

Profit and Loss Appropriation AccountFor the year ended March 31, 2019 | ||||||

Dr. | Cr. | |||||

Particulars | Rs. | Particulars | Rs. | |||

To Interest on Capital A/c | By Profit and Loss A/c | 4,59,500 | ||||

X | 24,000 | (4,61,000 – 1,500) | ||||

Y | 18,000 | 42,000 | By Interest on drawings | |||

To X’s Capital A/c (Commission) | —–X’s A/c | 5,000 | ||||

(3,50,000×5%) | 17,500 | —–Y’s A/c | 6,250 | 11,250 | ||

To Salary A/c | ||||||

—–X | 60,000 | |||||

—–Y | 90,000 | 1,50,000 | ||||

To Reserve A/c | 50,000 | |||||

To Profit transferred to : | ||||||

X’s Capital A/c | 1,18,125 | |||||

Y’s Capital A/c | 93,125 | 2,11,250 | ||||

4,70,750 | 4,70,750 | |||||

Partner’s Capital Account | |||||||

Dr | Cr | ||||||

Particulars | X | Y | Particulars | X | Y | ||

To Drawings A/c | 1,00,000 | 1,25,000 | By Balance b/d | 2,00,000 | 1,50,000 | ||

To Interest on drawings A/c | 5,000 | 6,250 | By Interest on Capital A/c | 24,000 | 18,000 | ||

To Balance c/d | 3,14,625 | 2,19,875 | By Salary A/c | 60,000 | 90,000 | ||

By Commission A/c | 17,500 | ||||||

By P/L Appropriation A/c | 1,18,125 | 93,125 | |||||

4,19,625 | 3,51,125 | 4,19,625 | 3,51,125 | ||||

**Working Note :**

**1.**

** Calculation of Reserve**

Profit before charging Interest on Drawings but after making appropriations

= Rs.4,59,500 – Rs.42,000 – Rs.17,500 – Rs.60,000 – Rs.90,000

= Rs.2,50,000

**2.**

**Division of Profits**

Partners | Up to Rs.1,75,000 | Rs.36,250 (Above Rs.1,75,000) | Total |

X | 1,00,000 | 18,125 | 1,18,125 |

Y | 75,000 | 18,125 | 93,125 |

Question 58

Q 58Solution 58

JournalAdjustment entry | ||||

Particulars | L.F. | DebitRs. | CreditRs. | |

P’s Current A/c | Dr. | 6,000 | ||

—–To Q’s Capital A/c | 6,000 | |||

(Being adjustment of omission of interest on capital) |

**Working Note:**

Statement Showing Adjustment | |||

P | Q | Total | |

Interest on Capital @ 12% | 24,000 | 36,000 | 60,000 |

Less: Profit wrongly distributed to the extent of interest amount | (30,000) | (30,000) | (60,000) |

Net Effect (Profit Sharing) | (6,000) | 6,000 | NIL |

Question 57

Q 57 Solution 57

Journal | ||||

Particulars | L.F. | DebitRs. | CreditRs. | |

Nisha’s Capital A/c | Dr. | 55,000 | ||

—–To Reya’s Capital A/c | 55,000 | |||

(Being adjustment of profit made) |

**Working Note :**

Total Profits for Last 3 years

= 1,40,000 + 84,000 + 1,06,000

= 3,30,000

Statement Showing Adjustment | ||||

Particulars | ReyaRs. | MonaRs. | NishaRs. | TotalRs. |

Right Distribution of Profit (3 :2 :1) | 1,65,000 | 1,10,000 | 55,000 | 3,30,000 |

Less: Wrong Distribution of Profit (1:1:1) | (1,10,000) | (1,10,000) | (1,10,000) | (3,30,000) |

Net Effect | 55,000 | NIL | (55,000) | NIL |

## Exercise 2.91

Question 59

Q 59 Solution 59

Journal | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

Anu’s Capital A/c | Dr. | 1,000 | |||

—-To Pankaj’s Capital A/c | 1,000 | ||||

(Being adjustment of commission of Interest on Capital) |

Working Note : | |||

Statement Showing Adjustment | |||

Particulars | PankajRs. | AnuRs. | TotalRs. |

Interest on Capital to be credited | 3,000 | 1,000 | 4,000 |

Less: Profit wrongly distributed | (2,000) | (2,000) | (4,000) |

Net Effect | 1,000(Credit) | 1,000(Debit) | NIL |

Question 60

Q 60Solution 60

Journal | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

Azad’s Current A/c | Dr. | 1,000 | |||

—-To Benny’s Current A/c | 1,000 | ||||

(Being adjustment of Profit made) |

**Working Note:**

Statement Showing Adjustment | |||

Azad | Benny | Total | |

Interest on Capital @ 5% | 2,000 | 4,000 | 6,000 |

Less: Profit wrongly distributed to the extent of interest amount (1:1) | (3,000) | (3,000) | (6,000) |

Net Effect (Profit Sharing) | (1,000) | (1,000) | NIL |

Question 61

Q 61Solution 61

Journal | ||||

Particulars | L.F. | DebitRs. | CreditRs. | |

Ram’s Capital A/c | Dr. | 300 | ||

——– To Sohan’s Capital A/c | 300 | |||

(Being Interest on Capital was wrongly credited now adjusted) | ||||

3. | ||||

Statement Showing Adjustment | ||||

Particulars | RamRs. | MohanRs. | SohanRs. | TotalRs. |

Reversal of Interest on Capital wrongly credited at 6% p.a. | (7,200) | (5,400) | (3,600) | (16,200) |

Interest on Capital credited at 5% p.a. | 6,000 | 4,500 | 3,000 | 13,500 |

Wrong Distribution | (1,200) | (900) | (600) | (2,700) |

Less: Right Distribution of 2,700 (1:1:1) | 900 | 900 | 900 | 2,700 |

Net Effect | (300) | NIL | 300 | NIL |

Question 62

Q 62 Solution 62

Journal | ||||

Particulars | L.F. | DebitRs. | CreditRs. | |

Shyam’s Current A/c | Dr | 200 | ||

Mohan’s Current A/c | Dr | 400 | ||

——– To Ram’s Current A/c | 600 | |||

(Being Interest on Capital adjusted) | ||||

3 | ||||

Statement Showing Adjustment | ||||

Particulars | RamRs. | MohanRs. | SohanRs. | TotalRs. |

Interest on Capital wrongly credited at 10% p.a. | 30,000 | 10,000 | 20,000 | 60,000 |

Less: Reversal of Interest on Capital Wrongly credited at 9% p.a. | (27,000) | (9,000) | (18,000) | (54,000) |

Right Distribution | 3,000 | 1,000 | 2,000 | 6,000 |

Wrong distribution of 6,000 (2:1:2) | (2,400) | (1,200) | (2,400) | (6,000) |

Net Effect | 600 | (200) | (400) | NIL |

Question 63

Q 63Solution 63

Journal | ||||

Particulars | L.F. | DebitRs. | CreditRs. | |

Usha’s Capital A/c | Dr. | 6,816 | ||

——– To Mita’s Capital A/c | 6,816 | |||

(Being Interest on Capital adjusted) | ||||

3 | |||

Statement Showing Adjustment | |||

Particulars | Mita ` | UshaRs. | TotalRs. |

Interest on Capital wrongly credited at 6% p.a. | 8,400 | 7,200 | 15,600 |

Interest on Drawing | (480) | (360) | (840) |

Commission to Mita | 8,000 | 8,000 | |

Wrong distribution of (2:3) | 9,104 | 13,656 | 22,760 |

Right distribution | (15,920) | (6,840) | (22760) |

Net Effect | (6,816) | 6,816 | NIL |

Question 64

Q 64Solution 64

Journal | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

Anil’s Capital A/c | Dr. | 550 | |||

——– To Mohan’s Capital A/c | 550 | ||||

(Being Interest on Capital and inters on drawings was omitted, now adjusted) | |||||

Working Notes | ||||

1 Calculation of Capital at the beginning | ||||

Particulars | MohanRs. | VijayRs. | AnilRs. | TotalRs. |

Capital at the end | 30,000 | 25,000 | 20,000 | 75,000 |

——-Add : Drawings | 5,000 | 4,000 | 3,000 | 12,000 |

——-Less : Profit (1:1:1) | (8,000) | (8,000) | (8,000) | (24,000) |

Capital in the beginning | 27,000 | 21,000 | 15,000 | 63,000 |

3 | ||||

Statement Showing Adjustment | ||||

Particulars | MohanRs. | VijayRs. | AnilRs. | TotalRs. |

Interest on Capital to be credited | 2,700 | 2,100 | 1,500 | 6,300 |

—–Less : Interest on Drawings | (250) | (200) | (150) | (600) |

Right Distribution of Net Rs.5,700 | 2,450 | 1,900 | 1,350 | 5,700 |

Less: Wrong Distribution of Rs.5,700 (1:1:1) | (1,900) | (1,900) | (1,900) | (5,700) |

Net Effect | 550 | NIL | (550) | NIL |

**4 **Calculation of Final Share of Profits

Total Corrected Profit Available for Distribution

= Profit – Interest On Capital + Interest on Drawings

= Rs.24,000 – Rs.6,300 + Rs.600

= Rs.18,300

Question 65

Q65Solution 65

Journal | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

Bina’s Capital A/c | Dr. | 5,856 | |||

——– To Piya’s Capital A/c | 5,856 | ||||

(Being Interest on Capital adjusted) | |||||

**Working Notes:**

Adjusting Table | |||

Particulars | Piya | Bina | Total |

Interest on Capital to be credited @ 12% (Cr.) | 1,920 | (480) | 1,440 |

Salary to A (Cr.) | 12,000 | – | 12,000 |

Profit to be credited (Cr.) | 63,936 | 42,624 | 1,06,560 |

Profit wrongly credited (Dr.) | (72,000) | (48,000) | (1,20,000) |

Difference | 5,856(Cr.) | 5,856(Dr.) | Nil |

Particulars | Piya | Bina | |

Capital at the end | 80,000 | 40,000 | |

Less : Profit already credited | 72,000 | 48,000 | |

Add : Drawings already debited | 8,000 | 4,000 | |

Capital at the beginning | 16,000 | (4,000) |

## Exercise 2.92

Question 66

Q 66Solution 66

Journal | ||||

Particulars | L.F. | Debit.Rs. | CreditRs. | |

Harry’s Capital A/c | Dr. | 50,000 | ||

Porter’s Current A/c | Dr. | 50,000 | ||

——– To Ali’s Current A/c | 1,00,000 | |||

(Being Internet On Capital wrongly credited now adjusted) | ||||

**Working Notes :**

Harry | Porter | Ali | = | TotalRs. | |

Total profit of 3 years (old Ratio) (2:2:1) | (3,00,000) | (3,00,000) | (1,50,000) | = | (7,50,000) |

Distribution of Profit (New Ratio) (1:1:1) | 2,50,000 | 2,50,000 | 2,50,000 | 7,50,000 | |

Adjusted Profit | (50,000) | (50,000) | 1,00,000 | = | NIL |

Dr. | Dr. | Cr. |

**Adjustment of Profit old Ratio:(2:2:1) **

Adjustment of Profit | Harry | Porter | Ali |

For 2015 – 2016 | 88,000 | 88,000 | 44,000 |

For 2016 – 2017 | 96,000 | 96,000 | 48,000 |

For 2017 – 2018 | 1,16,000 | 1,16,000 | 58,000 |

Net Effect | 3,00,000 | 3,00,000 | 1,50,000 |

Question 67

Q 67 Solution 67

Journal | ||||

Particulars | L.F. | DebitRs. | CreditRs. | |

P’s Current A/c | Dr. | 300 | ||

——– To Q’s Capital A/c | 8 | |||

——– To R’s Capital A/c | 292 | |||

(Being interest on capital was omitted, now adjusted) | ||||

Working Notes : | |||

1 Calculation of Capital at the beginning (as on April 01,2018) | |||

Particulars | PRs. | QRs. | RRs. |

Capital as in March 31,2017 (Closing) | 40,000 | 30,000 | 20,000 |

Add : Drawings | 10,000 | 7,500 | 4,500 |

Less : Profit 60,000 (3 :2 :1) | (30,000) | (20,000) | (10,000) |

Capital as on April 01, 2018 (Opening) | 20,000 | 17,500 | 14,500 |

3 | ||||

Statement Showing Adjustment | ||||

Particulars | PRs. | QRs. | RRs. | Total |

Interest on Capital (to be credited) | 1,000 | 875 | 725 | 2,600 |

For Sharing above Loss (3 :2 :1) | (1,300) | (867) | (433) | (2,600) |

Net Effect | (300) | 8 | 292 | NIL |

Question 68

Q 68 Solution 68

Journal | ||||

Particulars | L.F. | DebitRs. | CreditRs. | |

A’s Current A/c | Dr | 3,675 | ||

——– To B’s Current A/c | 2,895 | |||

——– To C’s Current a/c | 780 | |||

(Being Adjustment of profit made) | ||||

**Working Notes :**

**1 **Calculation of Interest on Capital

**2** Salary to B = 500 × 12 = 6,000

**3** Calculation of Commission to C

Commission to C = 5% on Profit after interest on capital but before salary

Profit after Interest on Capital but before Salary = Rs.30,000 – Rs.3,000 = Rs.27,000

**4 **Calculation of Share of Profit of each Partner

Profit available for Distribution = Rs.30,000 – Rs.3,000 – Rs.6,000 – Rs.1,350 = Rs.19,650

5 | ||||

Statement Showing Adjustment | ||||

Particulars | ARs. | BRs. | CRs. | Total |

Interest on Capital (to be credited | 1,500 | 1,00 | 500 | 3,000 |

Salary Commission (to be credited) | – | 6,00 | 1,350 | 7,350 |

Profit (to be credited) | 9,825 | 5,895 | 3,930 | 19,650 |

Right Distribution | 11,325 | 12,895 | 5,780 | 30,000 |

Wrong Distribution of 30,000 (3 :2:1) | (15,000) | (10,000) | (5,000) | (30,000) |

Net Effect | (3,675) | 2,895 | 780 | NIL |

Question 69

Q 69Solution 69

Adjusting entry | |||||

Date | Particulars | L.F. | Dr.Rs. | Cr.Rs. | |

Shrishti Capital A/c | Dr. | 288 | |||

——– To Mannu’s Capital A/c | 288 | ||||

(Being adjustment of Profit made) | |||||

Adjustment of Profit | ||||

Mannu’s | Shrishti | Total | ||

Interest on Capital | 1,500 | 500 | 2,000 | |

Less: Interest on Drawings | (120) | (60) | (180) | |

Right distribution of 1,820 | 1,380 | 440 | 1,820 | |

Less: Wrong distribution of 1,820 (3:2) | (1,092) | (728) | (1,820) | |

Adjusted Profit | 288 | (288) | NIL | |

Question 70

Q 70 Solution 70

Table for Partners’ Capital Adjustments:

Firm’s | Particulars | Mudit’s | Sudhir’s | Uday’s | ||||

Dr | Cr | Dr | Cr | Dr | Cr | Dr | Cr | |

1,00,000 | Profits Given | 60,000 | 20,000 | 20,000 | ||||

17,000 | Interest on Capital | 10,000 | 4,000 | 3,000 | ||||

18,000 | Salary | 18,000 | ||||||

15,000 | Commission | 3,000 | 12,000 | |||||

50,000 | Profit to be credited | 30,000 | 10,000 | 10,000 | ||||

60,000 | 61,000 | 20,000 | 14,000 | 20,000 | 25,000 |

Entry to be passed for rectification:

**Journal**

Date | Particulars | L.F. | Dr. | Cr. |

Sudhir’s Current A/c …Dr. To Mudit’s Current A/c To Uday’s Current A/c(Being partners’ account balances adjusted for interest on capital, salary to partners and commission, not recorded earlier) | 6,000 | 1,0005,000 |

## Exercise 2.93

Question 71

Q 71 Solution 71

Journal | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

A’s Capital A/c | Dr. | 2,520 | |||

C’s Capital A/c | Dr. | 2,740 | |||

——– To B’s Capital A/c | 5,260 | ||||

(Being Adjustment of Profit Made) | |||||

**Working Note**

**1** Calculation of Interest on Capital

**2 **Interest on drawing

For A – Rs.350

For B – Rs.250

For C – Rs.150

**3 **Salaries

To A – Rs.5,000, and

To B – Rs.7,500

**4 **Commission to A Rs.3,000

**5 **Calculation of Profit share of each partner

Profit available for distribution

= Rs.30,000 – Rs.7,200 + Rs.750 – Rs.12,500 – Rs.3,000

= Rs.8,050

6 | ||||

Statement Showing Adjustment | ||||

Particulars | ARs. | BRs. | CRs. | Total |

Interest On Capital (to be credited) | 3,000 | 2,400 | 1,800 | 7,200 |

Interest on Drawings (to Be debited | (350) | (250) | (150) | (750) |

Salaries to A and B (to be credited) | 5,000 | 7,500 | 12,500 | |

Commission to A (to be credited) | 3,000 | 3,000 | ||

Profits to be credited | 4,830 | 1,610 | 1,610 | 8,050 |

Correct Distribution of Profits | 15,480 | 11,260 | 3,260 | 30,000 |

Less: Wrong Distribution of Profits (3:1:1) | (18,000) | (6,000) | (6,000) | (30,000) |

Net Effect | 2,520Debit | 5260Credit | 2,740Debit | – |

Question 72

Q 72 Solution 72

Journal | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

Saroj’s Capital A/c | Dr. | 2,350 | |||

Mahinder’s Capital A/c | Dr. | 1,300 | |||

——– To Umar’s Capital A/c | 3,650 | ||||

(Being Profits wrongly distributed without providing interest on capital and drawings, now adjusted) | |||||

Working Note | |||

1 Calculating of Opening Capital | |||

Particulars | SarojRs. | MahinderRs. | UmarRs. |

Closing Capital | 80,000 | 60,000 | 40,000 |

Add : Drawings | 24,000 | 24,000 | 24,000 |

Less : Profits (80,000 in 4:3:1) | (40,000) | (30,000) | (10,000) |

Opening Capital | 64,000 | 54,000 | 66,000 |

**3: **Calculation of Share of Profits to be credited

Profit available for distribution among partners = Rs.80,000 – Rs.18,400 + Rs.2,000 = Rs.63,600

4: Statement showing adjustment | ||||

Statement Showing Adjustment | ||||

Particulars | SarojRs. | MahinderRs. | UmarRs. | Total |

Interest on Capital | 6,400 | 5,400 | 6,600 | 18,400 |

Interest on Drawings | (550) | (550) | (900) | (2,000) |

Profits to be distributed | 31,800 | 23,850 | 7,950 | 63,600 |

Total (A) | 37,650 | 28,700 | 13,650 | 80,000 |

Less : Profits wrongly distributed | (40,000) | (30,000) | (10,000) | (80,000) |

Net Effect (A – B) | (2,350)Dr | (1,300)Dr | 3,650Cr | NIL |

Question 73

Q 73Solution 73

Journal | ||||

Particulars | L.F. | DebitRs. | CreditRs. | |

A’s Capital A/c | Dr. | 66,000 | ||

——– To B’s Capital A/c | 30,000 | |||

——– To C’s Capital a/c | 36,000 | |||

(Being Adjustment of profit made) | ||||

Working Note : | |||

1: Calculation of Opening Capital | |||

Particulars | ARs. | BRs. | CRs. |

1. Closing Capital | 90,000 | 3,30,000 | 6,60,000 |

2. Add : Drawings | 3,60,000 | 3,60,000 | 3,60,000 |

4,50,000 | 6,90,000 | 10,20,000 | |

3. Less: Profit already credited (4:1:1) | (1,20,000) | (30,000) | (30,000) |

4. Opening Capital with interest on capital | 3,30,000 | 6,60,000 | 9,90,000 |

Less: Interest on Capital (4. × 10/110) | (30,000) | (60,000) | (90,000) |

Opening Capital | 3,00,000 | 6,00,000 | 9,00,000 |

3 : Statement showing adjustment | ||||

Particulars | ARs. | BRs. | CRs. | TotalRs. |

Interest on Capital 10% | 30,000 | 60,000 | 90,000 | 1,80,000 |

Profits to be distributed | 1,20,000 | 30,000 | 30,000 | 1,80,000 |

Less: Interest on Capital 12% | (36,000) | (72,000) | (1,08,000) | (2,16,000) |

Less: Share profit ratio(1:1:1) | (48,000) | (48,000) | (48,000) | (1,44,000) |

Net Effect | 66,000Dr. | 30,000Cr. | 36,000Cr. | NIL |

Question 74

Q 74Solution 74

Journal | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

Pand:L Adjustment A/c | Dr. | 29,200 | |||

——– To A’s Capital A/c | 16,400 | ||||

——– To B’s Capital A/c | 12,800 | ||||

(Being Interest on capital omitted, now provided) | |||||

A’s Capital A/c | Dr. | 900 | |||

B’s Capital A/c | Dr. | 450 | |||

——– To Pand L Adjustment A/c | 1,350 | ||||

(Being Interest on drawings omitted, now charged) | |||||

A’s Capital A/c | Dr. | 16,710 | |||

B’s Capital A/c | Dr. | 11,140 | |||

——– To PandL Adjustment A/c (29,200 – 1,350) | 27,850 | ||||

(Being Loss on adjustment is distributed between the partner) | |||||

Partner’s Current Account | |||||

Dr | Cr | ||||

Particulars | ARs. | BRs. | Particulars | ARs. | BRs. |

To B’s Capital A/c | 1,210 | By Balance b/d | 4,00,000 | 3,00,000 | |

To Balance c/d | 3,98,790 | 3,01,210 | By A’s Capital A/c | – | 1,210 |

4,00,000 | 3,01,210 | 4,00,000 | 3,01,210 | ||

Working Notes : | |||

1 Calculation of Capital as on April 01,2016 (Opening Capital) | |||

Particulars | ARs. | BRs. | TotalRs. |

Capital as on March 31,2017 (Closing) | 4,00,000 | 3,00,000 | 7,00,000 |

——Add : Drawings | 48,000 | 36,000 | 84,000 |

——Less : Profit | (1,20,000) | (80,000) | (2,00,000) |

Capital as on April 01,2016 (Opening) | 3,28,000 | 2,56,000 | 5,84,000 |

In Case only Adjustment Entry is to be passed | |||||

Journal | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

A’s Capital A/c | 1,210 | ||||

——–To B’s Capital A/c | 1,210 | ||||

(Being amount of interest on Capital and interest on drawings adjusted) | |||||

Working Notes : | |||

Statement Showing Adjustment | |||

Particulars | ARs. | BRs. | TotalRs. |

Interest on Capital (to be credited) | 16,400 | 12,800 | 29,200 |

—-Less : Interest on Drawings | (900) | (450) | (1,350) |

Right distribution of 27,850 | 15,500 | 12,350 | 27,850 |

—-Less : Wrong Distribution of 27,850 (3:2) | (16,710) | (11,140) | (27,850) |

Net Effect | (1,210) | 1,210 | NIL |

## Exercise 2.94

Question 75

Q 75 Solution 75

Journal | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

Z’s Loan A/c | Dr. | 2,00,000 | |||

——– To Z’s Capital A/c | 2,00,000 | ||||

(Being Z’s Loan transferred to his Capital Account) | |||||

X’s Capital A/c | Dr. | 3,600 | |||

Y’s Capita; A/c | Dr. | 2,400 | |||

——- To Z’s Capital A/c | 6,000 | ||||

(Being Z’s excess credit balance paid to him by X and Y in the ratio of 3 : 2) | |||||

Working Notes : | |||||||

1 Profit before Z’s Salary and Interest on Loan | |||||||

Year | Profit/Loss | + | Salary | + | Interest on Z’s loan | = | Profit before Z’s Salary and Interest on Loan |

2012 – 2013 | 5,90,000 | + | 90,000 | + | 18,000 | = | 6,98,000 |

2013 – 2014 | 6,26,000 | + | 90,000 | + | 18,000 | = | 7,34,000 |

2014 – 2015 | (40,000) | + | 90,000 | + | 18,000 | = | 68,000 |

2015 – 2016 | 7,80,000 | + | 90,000 | + | 18,000 | = | 8,88,000 |

Profit before Interest on Z’s Capital (for 4 years) |

**3 **Calculation of Z’s Share of Profit as a Partner

Profit after Interest on Z’s Capital = Profit before Interest on Z’s Capital – Interest on Z’s Capital = Rs.23,88,000 – Rs.48,000 = Rs.23,40,000

Z’s Profit Share as a Partner for 4 years

∴ Z’s Share of Interest on Capital and Profit Share as a Partner = Rs.48,000 + Rs.3,90,000 = Rs.4,38,000

Z’s Salary and Interest on Loan as Manager = Rs.72,000 + Rs.3,60,000 = Rs.4,32,000

Adjusting Table | |

Z’s Share as a Partner | 4,38,000 |

Less : Z’s Share as a Manager | (4,32,000) |

Z will get from X and Y in their profit sharing ratio | 6,000 |

Question 76

Q 76 Solution 76

Profit and Loss Appropriation AccountFor the year ended March 31, 2019 | |||||

Dr. | Cr. | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Profit transferred to : | By Profit and Loss A/c | 6,44,000 | |||

—-A’s Capital A/c | 3,35,200 | ||||

—-B’s Capital A/c | 1,80,000 | ||||

—-C’s Capital A/c | 1,28,800 | 6,44,000 | |||

6,44,000 | 6,44,000 | ||||

**Working Notes:**

**1.**

**Calculation of Remuneration to C as a Manager**

Salary to C Rs.50,000

Commission to C 10% salary and Commission After Net Profit

= Rs.6,44,000 – Rs.50,000 = Rs.5,94,000

Remuneration to C as a Manager = Salary + Commission = 50,000 + 54,000 = Rs.1,04,000

**2.**

**Calculation of Profit Share of C as a Partner**

Total Profit = Rs.6,44,000

Part of C’s share to be borne by A = 1,28,000 – 1,04,000= 24,800

Profits available for distribution = 6,44,000 – 1,04,000=5,40,000

Profit Share of A = 5,40,000 ×2/3 = 3,60,000

Profit Share of B = 5,40,000 ×1/3 = 1,80,000

Final Share of A after adjusting C’s Deficiency = 3,60,000 – 24,800 = 3,35,200.Question 77

Q 77 Solution 77

Profit and Loss Appropriation AccountFor the year ended March 31, 2019 | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Profit transferred to : | By Profit and Loss A/c | 31,500 | |||

—-A’s Capital A/c | 16,000 | (Net Profit) | |||

—-B’s Capital A/c | 8,000 | ||||

—-C’s Capital A/c | 7,500 | 31,500 | |||

31,500 | 31,500 | ||||

**Working Notes :**

Profit for the year = Rs.31,500

Profit sharing ratio = 4:2:1

Minimum profits guaranteed to C Rs.7,500

C’s Actual Profit Share (i.e. Rs.4,500) is less than his Minimum Guaranteed Profit (i.e. 7,500)

Deficiency in C’s Profit Share = Rs.7,500 -Rs. 4,500 = Rs.3,000

This deficiency is to be borne by A and B in their profit sharing ratio i.e. 4:2

Therefore,

Final Profit Share of A = Rs.18,000 – Rs.2,000 = Rs.16,000

Final Profit Share of B = Rs.9,000 – Rs.1,000 = Rs.8,000

Final Profit Share of C = Rs.4,500 + Rs.3,000 = Rs.7,500Question 78

Q 78 Solution 78

Profit and Loss Appropriation Account | |||||

Dr | Cr | ||||

Particulars | AmountRs. | Particulars | AmountRs. | ||

To Profit transferred to : | By Profit and Loss A/c | 54,000 | |||

—-A’s A/c | 26,400 | —- (Net Profit) | |||

—-B’s A/c | 17,600 | ||||

—-C’s A/c | 10,000 | 54,000 | |||

54,000 | 54,000 | ||||

Question 79

Q 79Solution 79

Profit and Loss Appropriation Accountas on 31^{st} March 2019 | ||||||

Dr | Cr | |||||

Particulars | Rs. | Particulars | Rs. | |||

To Interest on Capital A/c | By Net Profit b/d | 1,60,000 | ||||

—-X | 15,000 | |||||

—-Y | 10,000 | |||||

—-Z | 7,500 | 32,500 | ||||

To Profit transferred to : | ||||||

—-X’s A/c (51,000 – 1,750) | 49,250 | |||||

—-Y’s A/c (38,250) | 38,250 | |||||

—-Z’s A/c (38,250 + 1,750) | 40,000 | 1,27,500 | ||||

1,60,000 | 1,60,000 | |||||

**Note: **Z is admitted on 1^{st} October, 2018 and Profit is ascertained on March 31, 2019. Therefore, interest on Capital is to be calculated for 6 months and guaranteed amount is considered as Rs.40,000, i.e. half of the total amount.Question 80

Q 80 Solution 80

Profit and Loss Appropriation AccountFor the year ended 2018 | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Profit transferred to : | By Profit and Loss A/c | 40,000 | |||

—-A’s Capital A/c | 16,000 | —- (Net Profit) | |||

—-B’s Capital A/c | 14,000 | ||||

—-C’s Capital A/c | 10,000 | 40,000 | |||

40,000 | 40,000 | ||||

Profit and Loss Appropriation AccountFor the year ended 2019 | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Profit transferred to : | By Profit and Loss A/c | 60,000 | |||

—-A’s Capital A/c | 24,000 | —- (Net Profit) | |||

—-B’s Capital A/c | 24,000 | ||||

—-C’s Capital A/c | 12,000 | 60,000 | |||

60,000 | 60,000 | ||||

**Working Notes :**

**1**.

**Distribution of Profit for the year 2018**

Profit for 2018 = Rs.40,000

Profit sharing ratio = 2 : 2 :1

C is a given a guarantee of minimum profit of Rs.10,000

Deficiency in C’s Profit Share = Rs.10,000 – Rs.8,000 = Rs.2,000

This deficiency is to be borne by B

Therefore

Final Profit Share of A =Rs. 16,000

Final Profit Share of B = Rs.16,000 – Rs.2,000 = Rs.14,000

Final Profit Share of C = Rs.8,000 + Rs.2,000 = Rs.10,000

**2**.

**Distribution of Profit for the year 2019**

Profit for 2019

Profit sharing ratio = 2:2 : 1

C is given a guarantee of minimum profit of Rs.10,000

## Exercise 2.95

Question 81

Q 81 Solution 81

Profit and Loss Appropriation AccountFor the year ended March 31, 2019 | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Profit transferred to : | By Profit and Loss A/c | 40,000 | |||

—-A’s Capital A/c | 19,500 | —- (Net Profit) | |||

—-B’s Capital A/c | 15,500 | ||||

—-C’s Capital A/c | 5,000 | 40,000 | |||

40,000 | 40,000 | ||||

Question 82

Q 82 Solution 82

Profit and Loss Appropriation Accountfor the year ended 31^{st} March 19 | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Profit transferred to : | By Profit and Loss A/c | 9,00,000 | |||

—-Vikas’s Capital A/c | 4,50,000 | ||||

—-Vivek’s Capital A/c | 3,00,000 | ||||

—-Vandana’s Capital A/c | 1,50,000 | 9,00,000 | |||

9,00,000 | 9,00,000 | ||||

**Working Notes:**

**1.**

Remaining Profit = Rs.9,00,000 – Rs.1,12,500 = Rs.7,87,500

Minimum Guaranteed Profit Vandana = Rs.1,50,000

Deficiency = 37,500 (1,50,000 – 1,12,500)

Deficiency to borne by Vikas and Vivek in the ratio =2:3

Profit of Vikas after adjusting after deficiency = Rs.4,72,500 – Rs.22,500 = Rs.4,50,000

Profit on Vivek after adjusting after deficiency = Rs.3,15,000 – Rs.15,000 = Rs.3,00,000Question 83

Q 83Solution 83

Profit and Loss Appropriation Accountfor the year ended March 31, 2013 | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Profit transferred to : | By Profit and Loss A/c | 90,000 | |||

—-Pranshu’s Capital A/c | 30,000 | —- (Net Profit) | |||

—-Himanshu’s Capital A/c | 30,000 | ||||

—-Anshu’s Capital A/c | 30,000 | 90,000 | |||

90,000 | 90,000 | ||||

Question 84

Q 84Solution 84

Case (a) | |||||

Profit and Loss Appropriation Account | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Profit transferred to : | By Net Profit b/d | 30,000 | |||

—-A’s Capital A/c | 14,400 | ||||

—-B’s Capital A/c | 9,600 | ||||

—-C’s Capital A/c | 6,000 | 30,000 | |||

30,000 | 30,000 | ||||

Case (b) | |||||

Profit and Loss Appropriation Account | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Profit transferred to : | By Profit and Loss A/c | 30,000 | |||

—-A’s Capital A/c | 14,000 | ||||

—-B’s Capital A/c | 10,000 | ||||

—-C’s Capital A/c | 6,000 | 30,000 | |||

30,000 | 30,000 | ||||

Working Notes :

Deficiency in C’s Profit Share = Rs.6,000 – Rs.5,000 = Rs.1,000

This deficiency is to be borne by A only

Therefore,

Final Profit Share of A = Rs.15,000 – Rs.1,000 = Rs.14,000

Final Profit Share of B = Rs.10,000

Final Profit Share of C = Rs.5,000 + Rs.1,000 = Rs.6,000

Case (c) | |||||

Profit and Loss Appropriation Account | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Profit transferred to : | By Profit and Loss A/c | 30,000 | |||

—-A’s Capital A/c | 15,000 | ||||

—-B’s Capital A/c | 9,000 | ||||

—-C’s Capital A/c | 6,000 | 30,000 | |||

30,000 | 30,000 | ||||

Working Notes :

Deficiency in C’s Profit Share = Rs.6,000 – Rs.5,000 = Rs.1,000

This deficiency is to be borne by B only

Therefore,

Final Profit Share of A = Rs.15,000

Final Profit Share of B = Rs.10,000 – Rs.1,000 = Rs.9,000

Final Profit Share of C = Rs.5,000 + Rs.1,000 = Rs.6,000

Case (d) | |||||

Profit and Loss Appropriation Account | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Profit transferred to : | By Profit and Loss A/c | 30,000 | |||

—-A’s Capital A/c | 14,250 | ||||

—-B’s Capital A/c | 9,750 | ||||

—-C’s Capital A/c | 6,000 | 30,000 | |||

30,000 | 30,000 | ||||

Question 85

Q 85 Solution 85

Profit and Loss Appropriation Accountfor the year and March 31, 2019 | ||||||

Dr | Cr | |||||

Particulars | Rs. | Particulars | Rs. | |||

To Profit transferred to : | By Profit and Loss A/c | 2,25,000 | ||||

—-A’s Capital A/c | 96,750 | |||||

—-B’s Capital A/c | 72,000 | |||||

—-C’s Capital A/c | 56,250 | 2,25,000 | ||||

2,25,000 | 2,25,000 | |||||

**Working Notes**

**1.**

Calculation of Remuneration to C as a Manager

Salary to C = Rs.27,000

Commission to C = 10% of Net Profit after Salary and Commission

Net Profit after Salary and Commission

= Rs.2,25,000 – Rs.27,000

= Rs.1,98,000

C’s remuneration as Manager

= Salary + Commission

= Rs.27,000 + Rs.18,000

= Rs.45,000

**2**.

Calculation of Profit Share of C as a Partner

Profit = Rs.2,25,000

Part of C’s Profit Share to be borne by A = Rs.56,250 – Rs.45,000 =Rs. 11,250

Profit available for distribution between A and B = Rs.2,25,000 – Rs.45,000 = Rs.1,80,000

A’s Profit Share after adjusting C’s deficiency = Rs.1,08,000 – Rs.11,250 = Rs.96,750 Question 86

Q 86 Solution 86

Profit and Loss Appropriation Accountfor the year ended March 31, 2018 | |||||||

Dr | Cr | ||||||

Particulars | Rs. | Particulars | Rs. | ||||

To Interest on Capital A/c : | By Profit and Loss A/c | 4,24,000 | |||||

Asgar | 48,000 | —- (Net Profit) | |||||

Chaman | 40,000 | ||||||

Dholu | 32,000 | 1,20,000 | |||||

To Salary to Chaman A/c —- (7,000 × 12) | 84,000 | ||||||

To Salary to Dholu A/c —- (10,000 × 4) | 40,000 | ||||||

To Profit transferred to : | |||||||

Asgar Capital A/c | 70,000 | ||||||

Chaman Capital A/c | 40,000 | ||||||

Dholu Capital A/c | 70,000 | 1,80,000 | |||||

4,24,000 | 4,24,000 | ||||||

**Working Notes :**

Profit available for distribution

= Rs.4,24,000 – (Rs.1,20,000 + Rs.84,000 + Rs.40,000)

= Rs.1,80,000

Profit sharing ratio = 4:2:3

Dholu’s Minimum Guaranteed Profit = Rs.1,10,000 (excluding interest on capital but including salary)

Dholu’s Minimum Guaranteed Profit (excluding salary) = Rs.1,10,000 – Rs.40,000 = Rs.70,000

But, Dholu’s Actual Profit Share = Rs.60,000

Deficiency in Dholu’s Profit Share = Rs.70,000 – Rs.60,000 = Rs.10,000

This deficiency is to be borne only by Asgar

Therefore, Asgar New Profit Share

= Rs.80,000 – Rs.10,000

= Rs.70,000

## Exercise 2.96

Question 88

Q 88Solution 88

Profit and Loss Appropriation Accountfor the year ended March 31, 2018 | ||||||

Dr | Cr | |||||

Particulars | Rs. | Particulars | Rs. | |||

To Interest on Capital to : | By Profit and Loss A/c (Net Profit) | 9,50,000 | ||||

Ankur | 84,000 | |||||

Bhavna | 36,000 | |||||

Disha | 24,000 | 1,44,000 | ||||

To Salary to Bhavna | 50,000 | |||||

To Commission to Disha (3,000 × 12) | 36,000 | |||||

To Profit transferred to : | ||||||

Ankur | 4,14,000 | |||||

Bhavna | 1,80,000 | |||||

Disha | 1,26,000 | 7,20,000 | ||||

9,50,000 | 9,50,000 | |||||

**Working Notes :**

Profit available for distribution

= Rs.9,50,000 – (Rs.1,44,000 + Rs.50,000 + Rs.36,000)

= Rs.7,20,000

Profit sharing ratio = 7 : 3 :2

Bhavna’s Minimum Guaranteed Profit = Rs.1,70,000 (excluding interest on capital)

But, Bhavna’s Actual Profit Share = Rs.1,80,000

Disha’s Minimum Guaranteed Profit = Rs.1,50,000 (including interest on capital but excluding salary)

Disha’s Minimum Guaranteed Profit (excluding interest) = Rs.1,50,000 – Rs.24,000 = Rs.1,26,000

But, Disha’s Actual Profit Share = Rs.1,20,000

Deficiency in Disha’s Profit Share = Rs.1,26,000 – Rs.1,20,000 = Rs.6,000

This deficiency is to be borne by Ankur alone

Therefore,

Ankur’s New Profit Share = Rs.4,20,000 – Rs.6,000 = Rs.4,14,000 Question 89

Q 89Solution 89

Journal | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

Ankur’s Capital A/c | Dr. | 4,80,000 | |||

Bobby’s Capital A/c | Dr. | 3,20,000 | |||

Rohit’s Capital A/c | Dr. | 2,00,000 | |||

——– To Profit and Loss A/c | 10,00,000 | ||||

(Being Loss debited to Partner’s Capital Accounts) | |||||

Ankur’s Capital A/c | Dr. | 3,20,000 | |||

Bobby’s Capital A/c | Dr. | 80,000 | |||

——– To Rohit’s Capital A/c | 4,00,000 | ||||

(Being Deficiency borne by Ankur and Bobby in ratio of 4:1) | |||||

**3**: Calculation of Deficiency

Amount payable to Rohit

= Guaranteed Profit Amount + Loss transferred to Rohit’ Capital A/c

= Rs.2,00,000 + Rs.2,00,000

= Rs.4,00,000

Deficiency to be borne by Ankur and Bobby in the ratio of 4:1

Question 90

Q 90Solution 90

Journal | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

Ajay’s Capital A/c | Dr. | 6,400 | |||

Binay’s Capital A/c | Dr. | 2,000 | |||

——– To Chetan’s Capital A/c | 8,400 | ||||

(Being adjustment entry) | |||||

Working Notes:

1.

Profit and Loss Appropriation Accountfor the year ended March 31, 2015 | ||||||

Dr. | Cr. | |||||

Particulars | Rs. | Particulars | Rs. | |||

To Salary A/c | By Profit and Loss A/c | 1,50,000 | ||||

—-Ajay | 8,000 | |||||

—-Binay | 8,000 | 16,000 | ||||

To Chetan’s Capital A/c | ||||||

To Profit transferred to : | ||||||

—-Ajay’s Capital A/c | 45,600 | |||||

—-Binay’s Capital A/c | 50,000 | |||||

—-Chetan’s Capital A/c | 30,400 | 1,26,000 | ||||

1,50,000 | 1,50,000 | |||||

2.

Statement Showing Adjustment | ||||

Particulars | Ajay | Binay | Chetan | Total |

Salary be provided | 8,000 | 8,000 | — | 16,000 |

Commission to be provided | 8,000 | 8,000 | ||

Profit to be credited | 45,600 | 50,000 | 30,400 | 1,26,000 |

Total | 53,600 | 58,000 | 38,400 | 1,50,000 |

Profit already distributed | (60,000) | (60,000) | (30,000) | (1,50,000) |

Net Effect | (6,400) | (2,000) | 8,400 | Nil |

Question 87

Q 87Solution 87

Journal | |||||

Date | Particulars | L.F. | DebitRs. | CreditRs. | |

2015 – 16 | P’s Capital A/c | Dr. | 3,600 | ||

Q’s Capital A/c | Dr. | 2,400 | |||

——– To R’s Capital A/c | 6,000 | ||||

(Being deficiency adjust) | |||||

2017 – 18 | P’s Capital A/c | Dr. | 32,400 | ||

Q’s Capital A/c | Dr. | 21,600 | |||

——– To R’s Capital A/c | 54,000 | ||||

(Being deficiency adjust) | |||||

**Working Notes:**

**Calculation of amount of deficiency of R’s**

Minimum Guaranteed R’s Profit = Rs.30,000

Deficiency in R’s Profit = 30,000 – 24,000 = 6,000

Deficiency to borne by P and Q in the ratio =12:8

No deficiency in R’s profit as his actual share exceeds his minimum guaranteed share.

Deficiency in R’s Profit = 30,000 + 24,000 = 54,000

Deficiency to borne by P and Q in the ratio =12:8Question 91

Q 91Solution 91

Table for Partners’ Capital Adjustments:

Firm’s | Particulars | Alia’s | Bhanu’s | Chand’s | ||||

Dr | Cr | Dr | Cr | Dr | Cr | Dr | Cr | |

80,000 | Profits Given | 30,000 | 30,000 | 20,000 | ||||

36,000 | Salary | 18,000 | 18,000 | |||||

4,000 | Commission | 4,000 | ||||||

40,000 | Profit to be credited | 35,000 | 5,000 | |||||

30,000 | 53,000 | 30,000 | 9,000 | 20,000 | 18,000 |

Entry to be passed for rectification:

**Journal**

Date | Particulars | L.F. | Dr. | Cr. |

Bhanu’s Capital A/c …Dr.Chand’s Capital A/c …Dr. To Alia’s Capital A/c(Being partners’ account balances adjusted for interest on capital, salary to partners and commission, not recorded earlier) | 21,0002,000 | 23,000 |

## Exercise 2.97

Question 92

Q 92Solution 92

Profit and Loss Appropriation Account | |||||

Dr | Cr | ||||

Particulars | Rs. | Particulars | Rs. | ||

To Profit transferred to : | By Profit and Loss A/c | 75,000 | |||

—-A’s Capital A/c | 41,400 | By B’s Capital A/c | |||

—-B’s Capital A/c | 27,600 | —- (Deficiency in Revenue) | 9,000 | ||

—-C’s Capital A/c | 15,000 | 84,000 | |||

84,000 | 84,000 | ||||

**Working Notes :**

Deficiency in revenue guaranteed by B = 25,000 – 16,000 = 9,000

∴ Profit to be distributed among Partners

= 75,000 + B’s deficiency

= Rs.75,000 + Rs.9,000 = Rs.84,000

Profit Sharing ratio = 3:2:1

C is guaranteed of minimum profit of Rs.15,000

Deficiency in C’s Profit Share = Rs.15,000 – Rs.14,000 = Rs.1,000

Therefore, Final Profit Share of A = Rs.42,000 -Rs. 600 = Rs.41,400

Final Profit Share of B = Rs.28,000 – Rs.400 =Rs. 27,600**

Final Profit Share of C = Rs.14,000 +Rs. 1,000 = Rs.15,000

** The answer is different from one provided in the book as the deficiency of Rs.9,000 that was guaranteed by B to the firm would not be deducted from his share as he is bearing it in form of profit.