Accounting For Partnership FIRMS – Fundamentals

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’ capitals
c Interest on partners’ loan
d Division of profit, and
e 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

DisputesPossible 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
DrCr
ParticularsRs.ParticularsRs.
To Interest on Partner’s Loan A/c By Profit and Loss A/c1,80,000
Harshad [1,00,000 ×(6/100)× (6/12)]3,000  
To Profit and Loss Appropriation A/c1,77,000  
 1,80,0001,80,000
Profit and Loss Appropriation Account
DrCr
ParticularsRs.ParticularsRs.
To Profit transferred to : By Profit and Loss Adjustment A/c1,77,000
 Harshad’s Capital A/c88,500  
 Dhiman’s Capital A/c88,500  
 1,77,0001,77,000

Question 6

Solution 6

Profit and Loss Appropriation Accountfor the year ended March 31, 2019
DrCr
ParticularsRs.ParticularsRs.
To Interest on A’s Loan A/c 240By Profit b/d (before Interest)15,000
To Profit transferred to :    
 A’s Capital A/c7,380   
 B’s Capital A/c7,38014,760  
  15,00015,000

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 7

Solution 7

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

Profit sharing ratio = 3 :2

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

Interest rate = 6% p.a.

Calculation of Interest on Advances

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals
Case 1 – When Profits before Interest amounted to Rs.21,000
Profit and Loss Appropriation Accountfor the year ended March 31, 2019
DrCr
ParticularsRs.ParticularsRs.
To Interest on X’s Loan A/c 2,400By 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)10,44017,400  
  21,00021,000
Case 2 – When Profits before Interest amounted to Rs.3,000
Profit and Loss Appropriation Accountfor the year ended March 31, 2019
DrCr
ParticularsRs.ParticularsRs.
To Interest on X’s Loan A/c2,400By Profit b/d (before interest) 3,000
To Interest on Y’s Loan A/c1,200By Loss transferred to-  
   X’s Capital A/c (600 ×2/5)240 
   Y’s Capital A/s (600 × 3/5)360600
     
 3,6003,600
Case 3 – When Profits before Interest amounted to Rs.5,000
Profit and Loss Appropriation Accountfor the year ended March 31, 2019
DrCr
ParticularsRs.ParticularsRs.
To Interest on X’s Loan A/c 2,400By 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)8401,400  
  5,0005,000
Case 4 – When Losses before Interest were Rs.1,400
Profit and Loss Appropriation Accountfor the year ended March 31, 2019
DrCr
ParticularsRs.ParticularsRs.
To Loss b/d (before interest) 2,400By Loss transferred to:  
To Interest on X’s Loan A/c 1,200X’s Capital A/c (1400 × 2/5)2,000 
To Interest on Y’s Loan A/c 1,400Y’ Capital A/c (1400 × 3/5)3,0005,000
  5,0005,000

Question 9

Solution 9

Profit and Loss Appropriation Accountfor the year ended March 31, 2019
DrCr
ParticularsRs.ParticularsRs.
To Loss b/d (before interest)9,000By Loan transferred to :  
To Interest on Bat’s Loan A/c7,200 Bat’s Capital A/c31,920 
To Interest on Ball’s loan A/c3,600 Ball’s Capital A/c47,88079,800
To Rent A/c (Bat’s)60,000   
 79,80079,800

Working notes :

1.  Interest on Partner’s Loan

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

3.Distribution of Loss to the Partners

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 10

Solution 10

Profit and Loss Appropriation Account
Dr.  Cr.
ParticularsRs.ParticularsRs.
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)3,6009,600  
To Salary to B’s A/c (3,000 × 12) 36,000  
To Profit transferred to :    
—-A’s Capital A/c17,200   
—-B’s Capital A/c17,20034,400  
  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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 11

Solution 11

Profit and Loss Appropriation Account
Dr.  Cr.
ParticularsRs.ParticularsRs.
To Interest on Capital A/c  ByProfit and Loss A/c4,00,000
—-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)25,0001,25000  
To Profit transferred to :    
—-X’s Capital A/c1,10,000   
—-Y’s Capital A/c1,10,000   
—-Z’s Capital A/c55,0002,75,000  
  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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 12

Solution 12

Profit and Loss Adjustment Account
Dr.  Cr.
ParticularsRs.ParticularsRs.
To Manager’s Commission A/c(3,00,000 × 5%)15,000By Profit and Loss A/c(Net Profit after Y’s salary)2,40,000
To Profit transferred to Profit and Loss Appropriation A/c:2,85,000By Y’s salary A/c60,000
 3,00,000 3,00,000
Profit and Loss Appropriation Account
Dr.  Cr.
ParticularsRs.ParticularsRs.
To Salary to Y’s A/c 60,000By Profit and Loss Adjustment A/c (After manager’s commission)2,85,000
To Interest on Capital A/c    
—-X40,000   
—-Y30,00070,000  
To Profit transferred to :    
—-X’s Capital A/c93,000   
—-Y’s Capital A/c62,0001,55,000  
  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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

2. Calculation of Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

3. Calculation of Profit Share of each Partner

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 13

Solution 13

Profit and Loss Appropriation Account
Dr.  Cr.
ParticularsRs.ParticularsRs.
To Salary to Prem(2,500 × 12) 30,000By Profit and Loss A/c(Net Profit) 90,575
To Commission to Manoj 10,000By Interest on Drawings A/c:  
To Interest on Capital A/c:  —-Prem 1,250 
—-Prem (5% of 2 Lacs)10,000 —-Manoj4251,675
—-Manoj (5% of 1.50 Lacs)7,50017,500   
To Profit transferred to:     
—-Prem’s Capital A/c20,850    
—-Manoj’s Capital A/c13,90034,750   
  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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Exercise 2.83

Question 14

Solution 14

Profit and Loss Appropriation Accountfor the year ended 31st March 2019
Dr.  Cr.
ParticularsRs.ParticularsRs.
To Profit and Loss A/c (Loss)1,00,000By Interest on Drawings A/c:  
  —- Reema3,000 
  —- Seema3,0006,000
     
  By Net Loss transferred to:  
  —- Reema Capital A/c47,000 
  —- Seema Capital A/c47,00094,000
 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. T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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 31st March 2019
Dr.  Cr.
ParticularsRs.ParticularsRs.
To Profit and Loss A/c (Loss)60,000By Interest on Drawings A/c:  
(1,20,000 – 1,80,000) —- Bhanu Current A/c3,750 
  —- Partap Current A/c7,50011,250
     
  By Net Loss transferred to:  
  —- Bhanu Current A/c24,375 
  —- Partap Current A/c24,37548,750
 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. T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Total interest = Rs.1,80,000

Question 16

Solution 16

Journal Entries
DateParticularsL.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 :

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 17

Solution 17

Journal Entries
DateParticularsL.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 31st March 2019
Dr.  Cr.
ParticularsRs.ParticularsRs.
To Interest on Capital  By Profit and Loss A/c6,00,000
—-Kamal A/c55,000   
—-Kapil A/c45,0001,00,000  
To Profit transferred to:    
—-Kamal’s Capital A/c2,50,000   
—-Kapil’s Capital A/c2,50,0005,00,000  
  6,00,000  6,00,000

Working Notes :

Calculation of Interest on Capital: 

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 18

Solution 18

Journal Entries
DateParticularsL.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 31st March 2019
Dr.  Cr.
ParticularsRs.ParticularsRs.
To Interest on Capitals:  By Profit and Loss A/c3,00,000
—-Simran’s A/c10,000   
—-Reema’s A/c10,00020,000  
To Profit transferred to :    
—-Simran’s Current A/c1,68,000   
—-Reema’s Current A/c1,12,0002,80,000  
  3,00,0003,00,000

Working Notes :

Calculation of Interest on Capital 

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 19

Solution 19

Journal Entries
DateParticularsL.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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Exercise 2.84

Question 20

Solution 20

Journal Entries
DateParticularsL.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 31st march 2019
Dr.  Cr.
ParticularsRs.ParticularsRs.
To Interest on Capitals:  By Profit and Loss A/c5,00,000
—-Ashish’s A/c65,000   
—-Aakash’s A/c70,0001,35,000  
To Profit transferred to :    
—-Ashish’s Capital A/c2,19,000   
—-Aakash’s Capital A/c1,46,0003,65,000  
  5,00,0005,00,000

Working Notes :

  1. Calculation of Opening Capital:
ParticularsAshishAakash
Capital at the end5,00,0006,00,000
Add: Drawings1,50,0001,00,000
Opening Capital6,50,0007,00,000

2. Calculation of Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 21

Solution 21

Journal Entries
DateParticularsL.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:

ParticularsNareshSukesh
Capital at the end3,00,0003,00,000
Add: Out of Capital Drawings50,000—–
Add: Against Profit Drawings1,00,0001,00,000
Opening Capital4,50,0004,00,000

2.

Calculation of Interest on Capital: 

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 22

Q 22Solution 22

Profit and Loss Appropriation Accountyear ended 31st march 2014
Dr.  Cr.
ParticularsRs.ParticularsRs.
To Interest on Capitals:  By Profit and Loss A/c7,800
—-Jay A/c4,800   
—-Vijay A/c3,0007,800  
  7,8007,800

Working Notes :

1.

Calculation of Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

2.

Calculation of Proportionate Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 23

Q 23Solution 23

Profit and Loss Appropriation Account
Dr.  Cr.
ParticularsRs.ParticularsRs.
To Salary A/c  By Profit and Loss A/c4,80,000
—-Amar1,20,000   
—-Bhanu 1,20,0002,40,000  
To Profit transferred to :    
—-Amar’s Capital A/c80,000   
—-Bhanu’s Capital A/c80,000   
—-Charu’s Capital A/c80,0002,40,000  
  4,80,0004,80,000

Question 24

Q 24 Solution 24

Net Profit for the year= Rs.1,10,000

Commission to A = 10% of on Net Profit

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 26

Q 26Solution 26

Profit and Loss Appropriation Accountfor the year ended March 31, 2019
DrCr.
ParticularsAmountRs.ParticularsAmount Rs.
To Partner’s Commission  By Profit and Loss A/c1,80,000
A’s A/c6,000 (Net Profit) 
B’s A/c9,000   
C’s A/c6,000   
D’s A/c9,00030,000  
To Profit transferred to :    
 A’s Capital A/c60,000   
 B’s Capital A/c45,000   
 C’s Capital A/c30,000   
 D’s Capital A/c15,0001,50,000  
  1,80,0001,80,000
     

Working Notes :

1.

Calculation of Partner’s Commission

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Exercise 2.85

Question 27

Solution 27

Profit and Loss Appropriation Accountfor the year ended March 31, 2019
Dr.Cr.
ParticularsRs.ParticularsRs.
To Partner’s Salary A/c  By Profit and Loss A/c4,20,000
 X (10,000 × 12)1,20,000 —- (Net Profit) 
 Y25,000 1,45,000  
To Partner’s Commission    
 X’s A/c27,500   
 Y’s A/c22,50050,000  
To Profit transferred to :    
 X’s Capital A/c1,12,500   
 Y’s Capital A/c1,12,5002,25,000  
  4,20,0004,20,000

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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.

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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.

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 30

Q 30Solution 30

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 31

Q 31Solution 31

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 32

Q 32Solution 32

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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
DateRs. (I)Months(II)Product(I × II)
Apr. 0110,000121,20,000
June 019,0001090,000
Nov. 0114,000570,000
Dec. 015,000420,000
Sum of Product3,00,000
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

2.

 Calculation of Interest on Gautam’s Drawings

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Exercise 2.86

Question 35

Q 35Solution 35

Calculation of Interest on A’s Capital

DateCapital×Period=Product
April 01, 2018 to June 30, 201850,000×3=1,50,000
July 01, 2018 to March 31, 201960,000×9=5,40,000
Sum of Product 6,90,000
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Calculation of Interest on B’s Capital

DateCapital×Period=Product
April 01, 2018 to June 30, 201840,000×3=1,20,000
July 01, 2018 to March 31, 201941,000×9=3,69,000
Sum of Product 4,89,000
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

ParticularsRamMohan
Capital at the end24,00018,000
Less : Profit already credited(8,000)(8,000)
(1 : 1)  
Add : Drawings already debited4,0006,000
Capital at the beginning20,00016,000
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 37

Q 37Solution 37

Calculation of Interest on Capital 

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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)
ParticularsLongRs.ShortRs.
Capital at the end1,20,0001,40,000
 Less : Adjusted Profit (1,50,000 – 1,00,000) in 1 : 1 ratio(25,000) (25,000) 
 Add : Adjusted Drawings40,00050,000
Capital in the beginning1,35,0001,65,000
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 39

Q 39Solution 39

Calculation of Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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.

ParticularsX:Y
Interest on Capital or1,200:600
Ratio of interest on Capital2:1
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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.

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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.

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 40

Q 40Solution 40

Calculation of Interest on Amit’s Capital

DateCapital×Period=Product
April 01, 2018 to Sept 30, 201815,00,000× 6=90,00,000
Oct. 01, 2018 to March 31, 201912,00,000× 6=72,00,000
Sum of Product 1,62,00,000
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Calculation of Interest on Bramit’s Capital

DateCapital×Period=Product
April 01, 2018 to Sept 30, 20189,00,000 × 6=54,00,000
Oct. 01, 2018 to March 31, 201912,00,000× 6=72,00,000
Sum of Product 1,26,00,000
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Exercise 2.87

Question 41

Q 41  Solution 41

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Working Notes:

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

ParticularsSimratBir
Capital at the end4,80,0006,00,000
Add: Drawings (out of capital)2,40,00060,000
Less: Fresh Capital introduced(1,20,000)(3,00,000)
Opening Capital6,00,0003,60,000

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

ParticularsSimratBir
Capital at the end4,80,0006,00,000
Add: Drawings (out of capital)2,40,00060,000
Add: Drawings (out of profits)1,20,00060,000
Less: Fresh Capital introduced(1,20,000)(3,00,000)
Less: Profit already credited(1,44,000)(96,000)
Opening Capital5,76,0003,24,000

Question 42

Q 42 Solution 42

Profit and Loss Appropriation Accountfor the year ended March 31, 2019
DrCr
ParticularsRs.ParticularsRs.
To Interest on Capital A/c  By Profit and Loss A/c80,000
 C6,000 —-(Net Profit) 
 D3,6009,600  
To Salary to D A/c (3,000 × 12) 36,000  
To Profit transferred to :    
 C’s Capital A/c17,200   
 D’s Capital A/c17,20034,400  
80,00080,000

Working note

1.

Calculation of Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

2.

Calculation of Profit Share of each Partner

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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.
ParticularsRs.ParticularsRs.
To Interest on Capital A/c  By Profit and Loss A/c (Net Profit) 2,16,000
—-Amit20,000 By Interest on Drawings A/c  
—-Vijay15,00035,000—-Amit2,200 
Salary A/c to :  —-Vijay2,5004,700
—-Amit (2,000 × 12)24,000    
—-Vijay (3,000 × 12)36,00060,000   
To Profit transferred to :     
—-Amit’s Capital A/c75,420    
—-Vijay’s Capital A/c50,2801,25,700   
  2,20,700 2,20,700

Working Notes :

1.

Calculation of Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

2.

Calculation of Profit Share of each Partner

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 44

Q 44Solution 44

Partner’s Capital Account
DrCr
ParticularsSohanRs.MohanRs.ParticularsSohanRs.MohanRs.
To Drawings A/c50,00030,000By Balance c/d4,00,0003,00,000
To Interest on Drawings A/c1,250750By Interest on Capital A/c20,00015,000
To Balance c/d4,69,7503,37,250By P and L Appropriation A/c60,00050,000
   By Partner’s Salary A/c36,000
   By Commission A/c5,0003,000
5,21,0003,68,0005,21,0003,68,000
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 45

Q 45Solution 45

Profit and Loss Account
DrCr
ParticularsRs.ParticularsRs.
To Interest on Kajal’s loan @ 6% p.a.1,800By Profit b/d70,260
To Profit transferred to P/L Appropriation A/c68,460  
 70,260 70,260
Profit and Loss Appropriation Account
DrCr
ParticularsRs.ParticularsRs.
To Interest on Capital A/c  By Profit and Loss A/c 68,460
 Sajal 2,500 By Interest on Drawings A/c  
 Kajal 2,0004,500 Sajal 300 
To Reserve A/c 6,450 Kajal 240540
To Profit transferred to :     
 Sajal’s Capital; A/c38,700    
 Kajal’s Capital A/c19,35058,050   
  69,000  69,000
Partner’s Capital Account
DrCr
ParticularsSajalRs.KajalRs.ParticularsSajalRs.KajalRs.
To Drawings A/c10,0008,000By Balance b/d50,00040,000
To Interest on Drawings A/c300240By Interest on Capital A/c2,5002,000
   By P and L Appropriation A/c38,70019,350
To Balance c/d80,90053,110   
 91,20061,350 91,20061,350

Working Note :

1. 

Calculation of Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

2. 

Calculation of Interest on Drawings

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

 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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Exercise 2.88

Question 46

Q 46Solution 46

Profit and Loss Appropriation AccountFor the year ended March 31, 2019
DrCr
ParticularsRs.ParticularsRs.
To Interest on Capital A/c  By Profit and Loss A/c 50,000
 A3,000 — (Net Profit)  
 B1,8004,800   
To B’s Salary A/c(500 × 12) 6,000   
To Partner’s Commission A/c     
 A6,000    
 B1,5817,581   
To Profit transferred to :     
 A’s Capital A/c23,714    
 B’s Capital A/c7,90531,619   
  50,000  50,000
      
Partner’s Current Account
DrCr
ParticularsARs.BRs.ParticularsARs.BRs.
To Drawings A/c8,0006,000By Balance b/d50,00030,000
To Balance c/d74,71441,286By Interest on Capital A/c3,0001,800
   By Commission A/c6,0001,581
   By Salary A/c 6,000
   By P/L Appropriation A/c23,7147,905
 82,71447,286 82,71447,286
      

Working Notes :

1.

Calculation of Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

2.

Calculation of Commission

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 47

Q 47Solution 47

Profit and Loss Appropriation Account
Dr.Cr.
ParticularsRs.ParticularsRs.
To Interest on Capital  By Profit and Loss A/c (Net Profit) 1,72,000
—–A5,000    
—–B5,000    
—–C10,00020,000   
To Salary to C A/c 12,000   
To Profit transferred to :     
—–A’s Capital A/c50,000    
—–B’s Capital A/c44,000    
—–C’s Capital A/c46,0001,40,000   
  1,72,000 1,72,000
Journal Entries
DateParticularsL.F.DebitRs.CreditRs.
 Interest on Capital A/cDr. 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/cDr. 12,000 
 —–To C’s Current A/c   12,000
 (Being Salary Allowed to C)    
 Profit and Loss Appropriation A/cDr. 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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

 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.

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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
DrCr
ParticularsRs.ParticularsRs.
To Manager’s Commission A/c—-(5% of 15,000)750By Profit b/d (before B’s Salary)—-(12,500 + 2,500)15,000
To Profit transferred to Profit and Loss Appropriation A/c14,250  
 15,00015,000
Profit and Loss Appropriation Account
DrCr
ParticularsRs.ParticularsRs.
To Interest on Capital A/c  By Profit and Loss A/c14,250
 A3,000   
 B1,8004,800  
To B’s Salary A/c 2,500  
To Profit transferred to    
 A’s Capital A/c4,170   
 B’s Capital A/c2,7806,950  
14,25014,250
Partner’s Capital Account
DrCr
ParticularsARs.BRs.ParticularsARs.BRs.
To Balance c/d57,17037,080By Balance b/d50,00030,000
   By Interest on Capital A/c3,0001,800
   By Salary A/c 2,500
   By PandL Appropriation A/c4,1702,780
 57,17037,08057,17037,080

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.15,000T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

2.

Calculation of Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 49

Q 49 Solution 49

Profit and Loss Appropriation Accountfor the year ended March 31, 2019
Dr Cr
ParticularsRs.ParticularsRs.
To Interest on capital A/c  By Profit b/d 21,000
—–P2,000 —-(after Salary)  
—–Q1,500    
—–R1,5005,000   
To Profit transferred to     
—–P’s Capital A/c7,000    
—–Q’s Capital A/c5,000    
—–R’s Capital A/c4,00016,000   
  21,00021,000
      
Partner’s Capital Account
DrCr
ParticularsPQRParticularsPQR
To Drawings A/c10,00010,00010,000By Balance b/d40,00030,00030,000
To Balance c/d39,00032,50029,500By Salaries A/c6,0004,000
    By Interest Capital A/c2,0001,5001,500
    By P/L Appropriation A/c7,0005,0004,000
 49,00042,50039,50049,00042,50039,500
        

Working Notes :

1.

Calculation of Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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%)

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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
DrCr
ParticularsRs.ParticularsRs.
To Interest on capital A/c  By Profit and Loss A/c 45,000
 A2,500    
 B1,500    
 C1,0005,000   
To Salary A/c to:     
 B5,000    
 C5,00010,000   
To Profit transferred to:     
 A’s Current A/c15,000    
 B’s Current A/c9,000    
 C’s Current A/c6,00030,000   
  45,00045,000
      
Partner’s Capital Account
DrCr
ParticularsARs.BRs.CRs.ParticularsARs.BRs.CRs.
    By Balance b/d50,00030,00020,000
To Balance c/d50,00030,00020,000    
50,00030,00020,00050,00030,00020,000
        
Partner’s Current Account
DrCr
ParticularsARs.BRs.CRs.ParticularsARs.BRs.CRs.
To Drawings A/c10,0007,5006,000By Balance b/d4,5001,5001,000
To Balance c/d12,0009,5007,000By Interest on Capital A/c2,5001,5001,000
    By Salaries A/c5,0005,000
    By P/L Appropriation A/c15,0009,0006,000
 22,00017,00013,00022,00017,00013,000
        

Working Notes

1.

Calculation of Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

2.

Calculation of share of profit of each Partner

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 51

Q 51Solution 51

Partner’s Capital Accounts
Dr Cr
ParticularsAliBahadurParticularsAliBahadur
To Balance c/d25,00020,000By Balance b/d25,00020,000
      
 25,00020,00025,00020,000
Partner’s Current Accounts
Dr Cr
ParticularsAliBahadurParticularsAliBahadur
To Drawings A/c3,5002,500By Interest on Capital A/c1,2501,000
To Balance c/d19,64210,883By Bahadur’s Salary A/c 3,000
   By P/L Appropriation A/c21,8929,383
 22,77513,22522,77513,225

Working Notes

1.

Profit and Loss Appropriation Accountfor the year ended March 31, 2019
Dr Cr
ParticularsRs.ParticularsRs.
To Interest on Capital A/c  By Profit and Loss A/c 40,000
 Ali1,250    
 Bahadur1,0002,250   
To Reserve A/c 3,475   
To Bahadur’s Salary A/c 3,000   
To Profit transferred to     
 Ali’s Capital A/c21,892    
 Bahadur’s Capital A/c9,38331,275   
  40,00040,000
      

2.

Calculation of Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

3.

Calculation of Amount to be transferred to Reserve

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 52

Q 52Solution 52

Profit and Loss Appropriation Accountfor the year ended March 31, 2019
Dr Cr
ParticularsRs.ParticularsRs.
To Interest on Capital A/c  By Profit and Loss A/c 33,360
 Amal2,000 —-(Net Profit)  
 Bimal1,500    
 Kamal1,2504,750   
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/c7,388    
 Bimal’s Capital A/c7,388    
 Kamal’s Capital A/c7,38722,163   
  33,36033,360
      
Partner’s Current Account
DrCr
ParticularsAmalBimalKamalParticularsAmalBimalKamal
To Balance c/d52,38839,87333,637By Balance b/d40,00030,00025,000
    By Interest on Capital A/c2,0001,5001,250
    By Salary A/c3,000
    By Commission985
    By P/L Appropriation A/c7,3887,3887,387
 52,38839,87333,63752,38839,87333,637
        

Working Note :

1.

Calculation of Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

3.

Calculation of Amount to be transferred to General Reserve

Amount for General Reserve

= 10 % of Profit

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 53

Q 53Solution 53

Profit and Loss Appropriation AccountFor the year ended March 31, 2019
Dr Cr
ParticularsRs.ParticularsRs.
To Interest on Capital A/c  By Profit and Loss A/c (Net Profit)5,00,000
 Amit5,000   
 Binita10,000   
 Charu15,00030,000  
To Salary to Amit A/c (10,000 ×12)1,20,000  
To Commission A/c (Binita)23,810  
To General Reserve A/c50,000  
To Profit transferred to :    
 Amit’s Capital A/c92,063   
 Binita’s Capital A/c92,063   
 Charu’s Capital A/c92,0642,76,190  
  5,00,005,00,000
     
Partner’s Capital Account
DrCr
ParticularsAmitBinitaCharuParticularsAmitBinitaCharu
To Balance c/d3,17,0633,25,8734,07,064By Balance b/d1,00,0002,00,0003,00,000
    By Interest on Capital A/c5,00010,00015,000
    By Salary A/c1,20,000  
    By Commission 23,810 
    By P/L Appropriation A/c92,06392,06392,064
 3,17,0633,25,8734,07,0643,17,0633,25,8734,07,064
        

Working Note :

1.

 Calculation of Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

2.

Calculation of Commission to Binita

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

3.

Calculation of Amount to be transferred to General Reserve

Amount for General Reserve 10 % of Profit

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 54

Q 54Solution 54

Profit and Loss Appropriation AccountFor the year ended March 31, 2019
Dr. Cr.
ParticularsRs.ParticularsRs.
To Interest on Capital  By Profit and Loss A/c 5,00,000
 Anita5,000 (Net Profit)  
 Bimla10,000    
 Cherry15,00030,000   
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/c1,15,857    
 Bimla’s Capital A/c1,15,857    
 Cherry’s Capital A/c1,15,8573,47,571   
  5,00,0005,00,000
      
Partner’s Capital Account
DrCr
ParticularsAnitaBimlaCherryParticularsAnitaBimlaCherry
To Balance c/d2,80,8573,49,6674,30,857By Balance b/d1,00,0002,00,0003,00,000
    By Interest on Capital A/c5,00010,00015,000
    By Salary A/c60,000  
    By Commission A/c 23,810 
    By P/L Appropriation A/c1,15,8571,15,8571,15,857
 2,80,8573,49,6674,30,857 2,80,8573,49,6674,30,857
        

Working Note :

1.

 Calculation of Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

2.

Calculation of Commission to Bimla

Commission to Bimla = 5% on Net Profits after Commission

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

3.

Calculation of Amount to be transferred to General Reserve

Amount for General Reserve 10 % of Divisible Profit

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Exercise 2.90

Question 55

Q 55 Solution 55

Profit and Loss Appropriation Accountfor the year ended March 31, 2019
Dr. Cr.
ParticularsRs.ParticularsRs.
To Interest on Anshul’s Capital A/c20,000By Profit and Loss A/c32,000
To Anshul’s Salary A/c12,000  
 32,000 32,000
    

Working Note

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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.

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 56

Q 56  Solution 56

Profit and Loss Appropriation AccountFor the year ended March 31, 2019
Dr. Cr.
ParticularsRs.ParticularsRs.
To Interest on Capital A/c  By Profit and Loss A/c 4,59,500
 X24,000 (4,61,000 – 1,500)  
 Y18,00042,000By Interest on drawings  
To X’s Capital A/c (Commission)  —–X’s A/c5,000 
(3,50,000×5%) 17,500—–Y’s A/c6,25011,250
To Salary A/c     
—–X60,000    
—–Y90,0001,50,000   
To Reserve A/c 50,000   
To Profit transferred to :     
 X’s Capital A/c1,18,125    
 Y’s Capital A/c93,1252,11,250   
  4,70,7504,70,750
      
Partner’s Capital Account
DrCr
ParticularsXYParticularsXY
To Drawings A/c1,00,0001,25,000By Balance b/d2,00,0001,50,000
To Interest on drawings A/c5,0006,250By Interest on Capital A/c24,00018,000
To Balance c/d3,14,6252,19,875By Salary A/c60,00090,000
   By Commission A/c17,500 
   By P/L Appropriation A/c1,18,12593,125
 4,19,6253,51,125 4,19,6253,51,125
      

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

2.

Division of Profits

PartnersUp to Rs.1,75,000Rs.36,250 (Above Rs.1,75,000)Total
X1,00,00018,1251,18,125
Y75,00018,12593,125

Question 58

Q 58Solution 58

JournalAdjustment entry  
ParticularsL.F.DebitRs.CreditRs.
P’s Current A/cDr. 6,000 
—–To Q’s Capital A/c   6,000
(Being adjustment of omission of interest on capital)    

Working Note:

Statement Showing Adjustment
 PQTotal
Interest on Capital @ 12%24,00036,00060,000
Less: Profit wrongly distributed to the extent of interest amount (30,000)(30,000)(60,000)
Net Effect (Profit Sharing)(6,000)6,000NIL

Question 57

Q 57 Solution 57

Journal
ParticularsL.F.DebitRs.CreditRs.
Nisha’s Capital A/cDr. 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
ParticularsReyaRs.MonaRs.NishaRs.TotalRs.
Right Distribution of Profit (3 :2 :1)1,65,0001,10,00055,0003,30,000
Less: Wrong Distribution of Profit (1:1:1)(1,10,000)(1,10,000)(1,10,000)(3,30,000)
Net Effect55,000NIL(55,000)NIL
     

Exercise 2.91

Question 59

Q 59 Solution 59

Journal
DateParticularsL.F.DebitRs.CreditRs.
 Anu’s Capital A/cDr. 1,000 
 —-To Pankaj’s Capital A/c   1,000
 (Being adjustment of commission of Interest on Capital)    
Working Note :
Statement Showing Adjustment
ParticularsPankajRs.AnuRs.TotalRs.
Interest on Capital to be credited3,0001,0004,000
Less: Profit wrongly distributed(2,000)(2,000)(4,000)
Net Effect1,000(Credit)1,000(Debit)NIL
    

Question 60

Q 60Solution 60

Journal
DateParticularsL.F.DebitRs.CreditRs.
 Azad’s Current A/cDr. 1,000 
 —-To Benny’s Current A/c   1,000
 (Being adjustment of Profit made)    

Working Note:

Statement Showing Adjustment
 AzadBennyTotal
Interest on Capital @ 5%2,0004,0006,000
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
ParticularsL.F.DebitRs.CreditRs.
Ram’s Capital A/cDr. 300 
——– To Sohan’s Capital A/c   300
(Being Interest on Capital was wrongly credited now adjusted)    
     
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals
3.
Statement Showing Adjustment
ParticularsRamRs.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.6,0004,5003,00013,500
Wrong Distribution(1,200)(900)(600)(2,700)
Less: Right Distribution of 2,700 (1:1:1)9009009002,700
Net Effect(300)NIL300NIL
    

Question 62

Q 62 Solution 62

Journal
ParticularsL.F.DebitRs.CreditRs.
Shyam’s Current A/cDr 200 
Mohan’s Current A/cDr 400 
——– To Ram’s Current A/c   600
(Being Interest on Capital adjusted)    
     
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals
3
Statement Showing Adjustment
ParticularsRamRs.MohanRs.SohanRs.TotalRs.
Interest on Capital wrongly credited at 10% p.a.30,00010,00020,00060,000
Less: Reversal of Interest on Capital Wrongly credited at 9% p.a.(27,000)(9,000)(18,000)(54,000)
Right Distribution3,0001,0002,0006,000
Wrong distribution of 6,000 (2:1:2)(2,400)(1,200)(2,400)(6,000)
Net Effect600(200)(400)NIL
    

Question 63

Q 63Solution 63

Journal
ParticularsL.F.DebitRs.CreditRs.
Usha’s Capital A/cDr. 6,816 
——– To Mita’s Capital A/c   6,816
(Being Interest on Capital adjusted)    
     
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals
3
Statement Showing Adjustment
ParticularsMita `UshaRs.TotalRs.
Interest on Capital wrongly credited at 6% p.a.8,4007,20015,600
Interest on Drawing(480)(360)(840)
Commission to Mita8,000 8,000
Wrong distribution of  (2:3)9,10413,65622,760
Right distribution(15,920)(6,840)(22760)
Net Effect(6,816)6,816NIL
   

Question 64

Q 64Solution 64

Journal
DateParticularsL.F.DebitRs.CreditRs.
 Anil’s Capital A/cDr. 550 
 ——– To Mohan’s Capital A/c   550
 (Being Interest on Capital and inters on drawings was omitted, now adjusted)    
      
Working Notes
Calculation of Capital at the beginning
ParticularsMohanRs.VijayRs.AnilRs.TotalRs.
Capital at the end30,00025,00020,00075,000
——-Add : Drawings5,0004,0003,00012,000
——-Less : Profit (1:1:1)(8,000)(8,000)(8,000)(24,000)
Capital in the beginning27,00021,00015,00063,000
     
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals
3
Statement Showing Adjustment
ParticularsMohanRs.VijayRs.AnilRs.TotalRs.
Interest on Capital to be credited2,7002,1001,5006,300
—–Less : Interest on Drawings(250)(200)(150)(600)
Right Distribution of Net Rs.5,7002,4501,9001,3505,700
Less: Wrong Distribution of Rs.5,700 (1:1:1)(1,900)(1,900)(1,900)(5,700)
Net Effect550NIL(550)NIL
     

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 65

Q65Solution 65

Journal
DateParticularsL.F.DebitRs.CreditRs.
 Bina’s Capital A/cDr. 5,856 
 ——– To Piya’s Capital A/c   5,856
 (Being Interest on Capital adjusted)    
      

Working Notes:

Adjusting Table
ParticularsPiyaBinaTotal
Interest on Capital to be credited @ 12% (Cr.)1,920(480)1,440
Salary to A (Cr.)12,00012,000
Profit to be credited (Cr.)63,93642,6241,06,560
Profit wrongly credited (Dr.)(72,000)(48,000)(1,20,000)
Difference5,856(Cr.)5,856(Dr.)Nil
ParticularsPiyaBina
Capital at the end80,00040,000
 Less : Profit already credited72,00048,000
 Add : Drawings already debited8,0004,000
Capital at the beginning16,000(4,000)
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Exercise 2.92

Question 66

Q 66Solution 66

Journal
ParticularsL.F.Debit.Rs.CreditRs.
Harry’s Capital A/cDr. 50,000 
Porter’s Current A/cDr. 50,000 
——– To Ali’s Current A/c   1,00,000
(Being Internet On Capital wrongly credited now adjusted)    
     

Working Notes :

HarryPorterAli=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)2,50,0002,50,0002,50,000 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 ProfitHarryPorterAli
For 2015 – 201688,00088,00044,000
For 2016 – 201796,00096,00048,000
For 2017 – 20181,16,0001,16,00058,000
Net Effect3,00,0003,00,0001,50,000
    

Question 67

Q 67 Solution 67

Journal
ParticularsL.F.DebitRs.CreditRs.
P’s Current A/cDr. 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 :
Calculation of Capital at the beginning (as on April 01,2018)
ParticularsPRs.QRs.RRs.
Capital as in March 31,2017 (Closing)40,00030,00020,000
Add : Drawings10,0007,5004,500
Less : Profit 60,000 (3 :2 :1)(30,000)(20,000)(10,000)
Capital as on April 01, 2018 (Opening)20,00017,50014,500
   
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals
3
Statement Showing Adjustment
ParticularsPRs.QRs.RRs.Total
Interest on Capital (to be credited)1,0008757252,600
For Sharing above Loss (3 :2 :1)(1,300)(867)(433)(2,600)
     
Net Effect(300)8292NIL
    

Question 68

Q 68 Solution 68

Journal
ParticularsL.F.DebitRs.CreditRs.
A’s Current A/cDr 3,675 
——– To B’s Current A/c   2,895
——– To C’s Current a/c   780
(Being Adjustment of profit made)    
     

Working Notes :

Calculation of Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals
5
Statement Showing Adjustment
ParticularsARs.BRs.CRs.Total
Interest on Capital (to be credited1,5001,005003,000
Salary Commission (to be credited)6,001,3507,350
Profit (to be credited)9,8255,8953,93019,650
Right Distribution11,32512,8955,78030,000
Wrong Distribution of 30,000 (3 :2:1)(15,000)(10,000)(5,000)(30,000)
Net Effect(3,675)2,895780NIL
    

Question 69

Q 69Solution 69

Adjusting entry
DateParticularsL.F.Dr.Rs.Cr.Rs.
     
 Shrishti Capital A/cDr. 288 
 ——– To Mannu’s Capital A/c   288
 (Being adjustment of Profit made)    
      
      
Adjustment of Profit
 Mannu’sShrishtiTotal
Interest on Capital1,5005002,000
 Less: Interest on Drawings(120)(60)(180)
Right distribution of 1,8201,3804401,820
Less: Wrong distribution of 1,820 (3:2)(1,092)(728)(1,820)
Adjusted Profit288(288)NIL

Question 70

Q 70 Solution 70

Table for Partners’ Capital Adjustments:

Firm’sParticularsMudit’sSudhir’sUday’s
DrCr DrCrDrCrDrCr
 1,00,000Profits Given60,000 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
   60,00061,00020,00014,00020,00025,000
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Entry to be passed for rectification:

Journal 

DateParticularsL.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
DateParticularsL.F.DebitRs.CreditRs.
 A’s Capital A/cDr. 2,520 
 C’s Capital A/cDr. 2,740 
 ——– To B’s Capital A/c   5,260
 (Being Adjustment of Profit Made)    
      

Working Note

1 Calculation of Interest on Capital

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Interest on drawing 

For A – Rs.350

For B – Rs.250

For C – Rs.150

Salaries

To A – Rs.5,000, and

To B – Rs.7,500

Commission to A Rs.3,000

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals
6
Statement Showing Adjustment
ParticularsARs.BRs.CRs.Total
Interest On Capital (to be credited)3,0002,4001,8007,200
Interest on Drawings (to Be debited(350)(250)(150)(750)
Salaries to A and B (to be credited)5,0007,500 12,500
Commission to A (to be credited)3,000  3,000
Profits to be credited4,8301,6101,6108,050
Correct Distribution of Profits15,48011,2603,26030,000
Less: Wrong Distribution of Profits (3:1:1)(18,000)(6,000)(6,000)(30,000)
Net Effect2,520Debit5260Credit2,740Debit
    

Question 72

Q 72 Solution 72

Journal
DateParticularsL.F.DebitRs.CreditRs.
 Saroj’s Capital A/cDr. 2,350 
 Mahinder’s Capital A/cDr. 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
Calculating of Opening Capital
ParticularsSarojRs.MahinderRs.UmarRs.
Closing Capital80,00060,00040,000
Add : Drawings24,00024,00024,000
Less : Profits (80,000 in 4:3:1)(40,000)(30,000)(10,000)
Opening Capital64,00054,00066,000
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals
4: Statement showing adjustment
Statement Showing Adjustment
ParticularsSarojRs.MahinderRs.UmarRs.Total
Interest on Capital6,4005,4006,60018,400
Interest on Drawings(550)(550)(900)(2,000)
Profits to be distributed31,80023,8507,95063,600
Total (A)37,65028,70013,65080,000
Less : Profits wrongly distributed(40,000)(30,000)(10,000)(80,000)
Net Effect (A – B)(2,350)Dr(1,300)Dr3,650CrNIL

Question 73

Q 73Solution 73

Journal
ParticularsL.F.DebitRs.CreditRs.
A’s Capital A/cDr. 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
ParticularsARs.BRs.CRs.
1. Closing Capital90,0003,30,0006,60,000
2. Add : Drawings3,60,0003,60,0003,60,000
 4,50,0006,90,00010,20,000
3. Less: Profit already credited (4:1:1)(1,20,000)(30,000)(30,000)
4. Opening Capital with interest on capital3,30,0006,60,0009,90,000
Less: Interest on Capital (4. × 10/110)(30,000)(60,000)(90,000)
Opening Capital3,00,0006,00,0009,00,000
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals
3 : Statement showing adjustment
ParticularsARs.BRs.CRs.TotalRs.
Interest on Capital 10%30,00060,00090,0001,80,000
Profits to be distributed1,20,00030,00030,0001,80,000
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 Effect66,000Dr.30,000Cr.36,000Cr.NIL

Question 74

Q 74Solution 74

Journal
DateParticularsL.F.DebitRs.CreditRs.
 Pand:L Adjustment A/cDr. 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/cDr. 900 
 B’s Capital A/cDr. 450 
 ——– To Pand L Adjustment A/c   1,350
 (Being Interest on drawings omitted, now charged)    
      
 A’s Capital A/cDr. 16,710 
 B’s Capital A/cDr. 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
DrCr
ParticularsARs.BRs.ParticularsARs.BRs.
To B’s Capital A/c1,210 By Balance b/d4,00,0003,00,000
To Balance c/d3,98,7903,01,210By A’s Capital A/c1,210
 4,00,0003,01,210 4,00,0003,01,210
      
Working Notes :
Calculation of Capital as on April 01,2016 (Opening Capital)
ParticularsARs.BRs.TotalRs.
Capital as on March 31,2017 (Closing)4,00,0003,00,0007,00,000
——Add : Drawings48,00036,00084,000
——Less : Profit(1,20,000)(80,000)(2,00,000)
Capital as on April 01,2016 (Opening)3,28,0002,56,0005,84,000
    
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals
In Case only Adjustment Entry is to be passed
Journal
DateParticularsL.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
ParticularsARs.BRs.TotalRs.
Interest on Capital (to be credited)16,40012,80029,200
—-Less : Interest on Drawings(900)(450)(1,350)
Right distribution of 27,85015,50012,35027,850
—-Less : Wrong Distribution of 27,850 (3:2)(16,710)(11,140)(27,850)
Net Effect(1,210)1,210NIL
    

Exercise 2.94

Question 75

Q 75 Solution 75

Journal
DateParticularsL.F.DebitRs.CreditRs.
 Z’s Loan A/cDr. 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/cDr. 3,600 
 Y’s Capita; A/cDr. 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
YearProfit/Loss+Salary+Interest on Z’s loan=Profit before Z’s Salary and Interest on Loan
2012 – 20135,90,000+90,000+18,000=6,98,000
2013 – 20146,26,000+90,000+18,000=7,34,000
2014 – 2015(40,000)+90,000+18,000=68,000
2015 – 20167,80,000+90,000+18,000=8,88,000
Profit before Interest on Z’s Capital (for 4 years)
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

∴ 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 Partner4,38,000
Less : Z’s Share as a Manager(4,32,000)
Z will get from X and Y in their profit sharing ratio6,000
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 76

Q 76 Solution 76

Profit and Loss Appropriation AccountFor the year ended March 31, 2019
Dr. Cr.
ParticularsRs.ParticularsRs.
To Profit transferred to :  By Profit and Loss A/c 6,44,000
—-A’s Capital A/c3,35,200    
—-B’s Capital A/c1,80,000    
—-C’s Capital A/c1,28,8006,44,000   
  6,44,0006,44,000
      

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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
ParticularsRs.ParticularsRs.
To Profit transferred to :  By Profit and Loss A/c 31,500
—-A’s Capital A/c16,000 (Net Profit)  
—-B’s Capital A/c8,000    
—-C’s Capital A/c7,50031,500   
  31,50031,500
      

Working Notes :

Profit for the year = Rs.31,500

Profit sharing ratio = 4:2:1

Minimum profits guaranteed to C Rs.7,500

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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
ParticularsAmountRs.ParticularsAmountRs.
To Profit transferred to :  By Profit and Loss A/c 54,000
—-A’s A/c26,400 —- (Net Profit)  
—-B’s A/c17,600    
—-C’s A/c10,00054,000   
  54,00054,000
      
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 79

Q 79Solution 79

Profit and Loss Appropriation Accountas on 31st March 2019
Dr Cr
ParticularsRs.ParticularsRs.
To Interest on Capital A/c  By Net Profit b/d 1,60,000
—-X15,000    
—-Y10,000    
—-Z7,50032,500   
      
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)40,0001,27,500   
  1,60,000  1,60,000
      

Note: Z is admitted on 1st 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
ParticularsRs.ParticularsRs.
To Profit transferred to :  By Profit and Loss A/c 40,000
—-A’s Capital A/c16,000 —- (Net Profit)  
—-B’s Capital A/c14,000    
—-C’s Capital A/c10,00040,000   
  40,000  40,000
      
Profit and Loss Appropriation AccountFor the year ended 2019
Dr Cr
ParticularsRs.ParticularsRs.
To Profit transferred to :  By Profit and Loss A/c 60,000
—-A’s Capital A/c24,000 —- (Net Profit)  
—-B’s Capital A/c24,000    
—-C’s Capital A/c12,00060,000   
  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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Exercise 2.95

Question 81

Q 81 Solution 81

Profit and Loss Appropriation AccountFor the year ended March 31, 2019
Dr Cr
ParticularsRs.ParticularsRs.
To Profit transferred to :  By Profit and Loss A/c 40,000
—-A’s Capital A/c19,500 —- (Net Profit)  
—-B’s Capital A/c15,500    
—-C’s Capital A/c5,00040,000   
  40,000  40,000
      
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 82

 Q 82 Solution 82

Profit and Loss Appropriation Accountfor the year ended 31st March 19
Dr Cr
ParticularsRs.ParticularsRs.
To Profit transferred to :  By Profit and Loss A/c 9,00,000
—-Vikas’s Capital A/c4,50,000    
—-Vivek’s Capital A/c3,00,000    
—-Vandana’s Capital A/c1,50,0009,00,000   
  9,00,0009,00,000
      

Working Notes:

1.

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Remaining Profit = Rs.9,00,000 – Rs.1,12,500 = Rs.7,87,500

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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
ParticularsRs.ParticularsRs.
To Profit transferred to :  By Profit and Loss A/c 90,000
—-Pranshu’s Capital A/c30,000 —- (Net Profit)  
—-Himanshu’s Capital A/c30,000    
—-Anshu’s Capital A/c30,00090,000   
  90,000  90,000
      
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 84

Q 84Solution 84

Case (a)
Profit and Loss Appropriation Account
Dr Cr
ParticularsRs.ParticularsRs.
To Profit transferred to :  By Net Profit b/d 30,000
—-A’s Capital A/c14,400    
—-B’s Capital A/c9,600    
—-C’s Capital A/c6,00030,000   
  30,000  30,000
      
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals
Case (b)
Profit and Loss Appropriation Account
Dr Cr
ParticularsRs.ParticularsRs.
To Profit transferred to :  By Profit and Loss A/c 30,000
—-A’s Capital A/c14,000    
—-B’s Capital A/c10,000    
—-C’s Capital A/c6,00030,000   
  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
ParticularsRs.ParticularsRs.
To Profit transferred to :  By Profit and Loss A/c 30,000
—-A’s Capital A/c15,000    
—-B’s Capital A/c9,000    
—-C’s Capital A/c6,00030,000   
  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
ParticularsRs.ParticularsRs.
To Profit transferred to :  By Profit and Loss A/c 30,000
—-A’s Capital A/c14,250    
—-B’s Capital A/c9,750    
—-C’s Capital A/c6,00030,000   
  30,000  30,000
      
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 85

Q 85 Solution 85

Profit and Loss Appropriation Accountfor the year and March 31, 2019
Dr Cr
ParticularsRs.ParticularsRs.
To Profit transferred to :  By Profit and Loss A/c 2,25,000
—-A’s Capital A/c96,750    
—-B’s Capital A/c72,000    
—-C’s Capital A/c56,2502,25,000   
  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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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
ParticularsRs.ParticularsRs.
To Interest on Capital A/c :  By Profit and Loss A/c 4,24,000
 Asgar48,000 —- (Net Profit)  
 Chaman40,000    
 Dholu32,0001,20,000   
      
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/c40,000    
 Dholu Capital A/c70,0001,80,000   
   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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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
ParticularsRs.ParticularsRs.
To Interest on Capital to :  By Profit and Loss A/c (Net Profit)9,50,000
 Ankur84,000   
 Bhavna36,000   
 Disha24,0001,44,000  
     
To Salary to Bhavna 50,000  
To Commission to Disha (3,000 × 12) 36,000  
     
To Profit transferred to :    
 Ankur4,14,000   
 Bhavna1,80,000   
 Disha1,26,0007,20,000  
   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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Bhavna’s Minimum Guaranteed Profit = Rs.1,70,000 (excluding interest on capital)

But, Bhavna’s Actual Profit Share = Rs.1,80,000

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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
DateParticularsL.F.DebitRs.CreditRs.
 Ankur’s Capital A/cDr. 4,80,000 
 Bobby’s Capital A/cDr. 3,20,000 
 Rohit’s Capital A/cDr. 2,00,000 
 ——– To Profit and Loss A/c   10,00,000
 (Being Loss debited to Partner’s Capital Accounts)    
      
 Ankur’s Capital A/cDr. 3,20,000 
 Bobby’s Capital A/cDr. 80,000 
 ——– To Rohit’s Capital A/c   4,00,000
 (Being Deficiency borne by Ankur and Bobby in ratio of 4:1)    
      
      
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Question 90

Q 90Solution 90

Journal
DateParticulars L.F.DebitRs.CreditRs. 
 Ajay’s Capital A/cDr. 6,400 
 Binay’s Capital A/cDr. 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.ParticularsRs. 
To Salary A/c  By Profit and Loss A/c1,50,000
—-Ajay8,000   
—-Binay8,00016,000  
To Chetan’s Capital A/c    
To Profit transferred to :    
—-Ajay’s Capital A/c45,600   
—-Binay’s Capital A/c50,000   
—-Chetan’s Capital A/c30,4001,26,000  
     
      
   1,50,000 1,50,000
      

2.

Statement Showing Adjustment
ParticularsAjayBinayChetanTotal
Salary be provided8,0008,00016,000
Commission to be provided  8,0008,000
Profit to be credited45,60050,00030,4001,26,000
Total53,60058,00038,4001,50,000
Profit already distributed(60,000)(60,000)(30,000)(1,50,000)
Net Effect(6,400)(2,000)8,400Nil

Question 87

Q 87Solution 87

Journal
DateParticularsL.F.DebitRs.CreditRs.
2015 – 16P’s Capital A/cDr. 3,600 
 Q’s Capital A/cDr. 2,400 
 ——– To R’s Capital A/c   6,000
 (Being deficiency adjust)    
      
2017 – 18P’s Capital A/cDr. 32,400 
 Q’s Capital A/cDr. 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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Deficiency in R’s Profit = 30,000 – 24,000 = 6,000

Deficiency to borne by P and Q in the ratio =12:8

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

No deficiency in R’s profit as his actual share exceeds his minimum guaranteed share.

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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’sParticularsAlia’sBhanu’sChand’s
DrCr DrCrDrCrDrCr
 80,000Profits Given30,000 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  
   30,00053,00030,0009,00020,00018,000
T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

Entry to be passed for rectification:

Journal 

DateParticularsL.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
ParticularsRs.ParticularsRs.
To Profit transferred to :  By Profit and Loss A/c 75,000
—-A’s Capital A/c41,400 By B’s Capital A/c  
—-B’s Capital A/c27,600 —- (Deficiency in Revenue) 9,000
—-C’s Capital A/c15,00084,000   
  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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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

T-s-grewal Solutions Cbse Class 12-commerce Accountancy Chapter - Accounting For Partnership Firms Fundamentals

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.

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