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12th | Accounting For Partnership Firms Fundamentals | Question No.  51 To 55 | Solution 2022-2023

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

Question 51:


Ali the Bahadur are partners in a firm sharing profits and losses as Ali 70% and Bahadur 30%. Their respective capitals as at 1st April, 2021 stand as Ali  ` 25,000 and Bahadur  ` 20,000. The partners are allowed interest on capitals @ 5% p.a. Drawings of the partners during the year ended 31st March, 2022 amounted to  ` 3,500 and  ` 2,500 respectively.
Profit for the year, before charging interest on capital and annual salary of Bahadur @
 ` 3,000, amounted to  ` 40,000, 10% of divisible profit is to be transferred to Reserve.
You are asked to show Partners' Current Account and Capital Accounts recording the above transactions.

Answer:


Partners’ Capital Accounts

Dr.

Cr.

Particulars

Ali

Bahadur

Particulars

Ali

Bahadur

 

 

 

Balance b/d       

25,000

20,000

Balance c/d

25,000

20,000

 

 

 

 

25,000

20,000

 

25,000

20,000

 

 

 

 

 

 

 

Partners’ Current Accounts

Dr.

 

Cr.

Particulars

Ali

Bahadur

Particulars

Ali

Bahadur

Drawings A/c           

3,500

2,500

Interest on Capital A/c

1,250

1,000

 

 

 

Bahadur’s Salary A/c

-

3,000

Balance c/d

19,642

10,883

P/L Appropriation A/c

21,892

9,383

 

23,142

13,383

 

23,142

13,383

 

 

 

 

 

 

Working Notes:

WN 1

Profit and Loss Appropriation Account

for the year ended March 31, 2022

Dr.

 

 

Cr.

Particulars

 ( `)

Particulars

 ( `)

Interest on Capital:

 

Profit and Loss A/c             

40,000

Ali

1,250

 

 

 

Bahadur

1,000

2,250

 

 

Reserve

3,475

 

 

Bahadur’s Salary

3,000

 

 

Profit transferred to:

 

 

 

Ali’s Capital A/c

21,892

 

 

 

Bahadur’s Capital A/c

9,383

31,275

 

 

 

40,000

 

40,000

 

 

 

 

 

WN 2 Calculation of Interest on Capital

Interest on Ali’s capital=25,000×5/100=1,250

Interest on Bahadur’s capital=20,000×5/100=1,000

 

WN 3 Calculation of Amount to be transferred to Reserve
Amount transferred to Reserve=10% of Divisible Profits =10%×(40,000-2,250-3,000)=
` 3,475

 

WN 4 Calculation of Profit Share of each Partner

Profit available for distribution = 40,000- ` 2,250- ` 3,000- ` 3,475 = ` 31,275

Ali's Profit Share=31,275×70÷100 =21,892

Bahadur's Profit Share=31,275×30÷100 =9,383

 

Question 52;


Kabir, Zoravar and Parul are partners sharing prohts in the ratio of 5 :3 :2.Their capitals as on 1st April, 2021 were: Kabir- `5,20,000, Zoravar-`3,20,000 and Parul - `2,00,000.

The Partnership Deed provided as follows:

(i) Kabir and Zoravar each will get salary of `24,000 p.a.

(ii) Parul will get commission of 2% of Sales.

(iii) Interest on capital is to be allowed @ 5% p.a.

(iv) Interest on Drawings is to be charged @ 5% p.a.

(v) 10% of Divisible Profit is to be transferred to General Reserve.

Sales for the year ended 31st March, 2022 were `50,00,000. Drawings by each of the partners during the year was `60,000. Net Prom for the year was `1,55,500.

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

 

Answer;


Profit and loss appropriation account year ended 31st March, 2022

Particulars

`

Particulars

`

To Profit transferred

Kabir  -1,60,000×5/20=40,000

Zoravar-1,60,000×4/20=32,000

Parul-1,60,000×11/20=88,000

 

160,000

By  Net profit

By Interest on Drawings

Kabir- 60,000×5/100×5/12=1,500

Zoravar-60,000×5/100×5/12=1,500

Parul-60,000×5/100×5/12=1,500

1,55,500

4,500

 

1,60,000

 

1,60,000

 

Working note;

Profit and loss appropriation account year ended 31st March, 2022

 

Particulars

`

Particulars

`

To Salary

Kabir  -24,000

Zoravar-24,000

To Commission

Parul=50,00,000×2/100=1,00,000

 

To Interest on capital

Kabir  -5,20,000×5/100=26,000

Zoravar-3,20,000×4/20=16,000

Parul-2,00,000×10/20=10,000

 

 

48,000

 

1,00,000

 

 

 

 

52,000

By  Net profit

By Interest on Drawings

Kabir  -60,000×5/100×5/12=1,500

Zoravar-60,000×5/100×5/12=1,500

Parul-60,000×5/100×5/12=1,500

1,55,500

4,500

 

2,00,000

 

1,60,000

 

 Ratio of appropriation will be calculated for insufficient profit distribution given below;

Kabir  - Salary + Interest on capital

=24,000+26,000=50,000

Zoravar- Salary + Interest on capital

=24,000+16,000=40,000

Parul- Commission + Interest on capital

=1,00,000+10,000=1,10,000

Ratio of appropriation = 50,000 : 40,000 : 1,10,000=5:4:11

 

Question 53:


X and Y entered into partnership on 1st April, 2018. Their capitals as on 1st April, 2021 were  ` 2,00,000 and  ` 1,50,000 respectively. On 1st October, 2021, X gave  ` 50,000 as loan to the firm. As per the provisions of the partnership Deed:
(i) 20% of Profits before charging interest on Drawings but after making appropriations to be transferred to General Reserve.
(ii) Interest on capital at 12% p.a. and Interest on Drawings @ 10% p.a.
(iii) X to get monthly salary of
 ` 5,000 and Y to get salary of  ` 22,500 per quarter.
(iv) X is entitled to a commission of 5% on sales. Sales for the year were
 ` 3,50,000.
(v)  Profit to be shared in the ratio of their capitals up to
 ` 1,75,000 and balance equally.
Profit for the year ended 31st March, 2022 before allowing or charging interest was
 ` 4,61,000. The drawings of X and Y were  ` 1,00,000 and  ` 1,25,000 respectively.
Pass the necessary Journal entries relating to appropriation out of profit. Prepare Profit and Loss Appropriation Account and the Partners' Capital Accounts.

Answer:


Profit and Loss Appropriation Account

for the year ended March 31, 2022

Dr.

 

 

Cr.

Particulars

 ( `)

Particulars

 ( `)

Interest on Capital A/c:

 

Profit and Loss A/c
(4,61,000 – 1,500)

4,59,500

  X’s Capital A/c

24,000

 

Interest on Drawings A/c:

 

  Y’s Capital A/c

18,000

42,000

  X’s Capital A/c

5,000

 

X’s Capital A/c (Commission) (3,50,000 × 5%)

17,500

   Y ’s Capital A/c

6,250

11,250

Salary:

 

 

 

  X’s Capital A/c

60,000

 

 

 

  Y’s Capital A/c

90,000

1,50,000

 

 

Reserve (WN 1)

50,000

 

 

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

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

( `)

Y

( `)

Particulars

X

( `)

Y

( `)

Drawings A/c

1,00,000

1,25,000

Balance b/d

2,00,000

1,50,000

Interest on Drawings

5,000

6,250

Interest on Capital A/c

24,000

18,000

 

 

 

Salary A/c

60,000

90,000

 

 

 

Commission A/c

17,500

 

Balance c/d

3,14,625

2,19,875

P/L Appropriation A/c

1,18,125

93,125

 

4,19,625

3,51,125

 

4,19,625

3,51,125

 

 

 

 

 

 


Working Notes:

WN1: Calculation of Reserve 

Profit before charging Interest on Drawings but after making appropriations

= 4,59,500 -
`42,000 -`17,500 -`60,000- `90,000= 2,50,000
Reserve = 2,50,000×20100=
` 50,000

WN2: Division of Profit

Partners

Up to ` 1,75,000

` 36,250

(Above ` 1,75,000)

Total

X

1,00,000

18,125

1,18,125

Y

75,000

18,125

93,125

 

Question 54:


Reya, Mona and Nisha shared profits in the ratio of 3 : 2 : 1. The profits for the last three year were  ` 1,40,000;  ` 84,000 and  ` 1,06,000 respectively. These profits were by mistake shared equally for all the give necessary Journal entry for the same.

Answer:


Journal

Particulars

L.F.

Debit

`

Credit

`

Nisha’s Capital A/c

Dr.

 

55,000

 

To Reya’s Capital A/c

 

 

55,000

(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

Reya

Mona

Nisha

Total

Right Distribution of Profit (3 : 2 :1)

1,65,000

1,10,000

55,000

3,30,000

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

 

 

 

 

 

 

Question 55:


P and Q were partners in a firm sharing profits and losses equally. Their fixed capitals were  ` 2,00,000 and  ` 3,00,000 respectively. The Partnership Deed provided for interest on capital @ 12% per annum. For the year ended 31st March, 2016, the profits of the firm were distributed without providing interest on capital.
Pass necessary adjustment entry to rectify the error.

Answer:


Adjusting Journal Entry

Journal

Date

Particulars

L.F.

Debit
(
`)

Credit
(
`)

 

P’s Current A/c

Dr.

 

6,000

 

 

To Q’s Current A/c

 

 

 

6,000

 

(Interest on capital omitted, now adjusted.)

 

 

 


Working Notes:

Statement Showing Adjustment

Particulars

P

Q

Total

Interest on Capital @ 12%

24,000

36,000

(60,000)

   Less: Profits wrongly distributed to the extent of interest amount

(30,000)

(30,000)

60,000

Net Effect

(6,000)

6,000

NIL

 

Ts Grewal Solution 2022-2023

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Class 12 / Volume – I

Chapter 1 – Accounting For Partnership Firms Fundamentals

 

Question No. 1 To 5
Question No. 5 To 10
Question No. 11 To 15
Question No. 16 To 20
Question No. 21 To 25
Question No. 26 To 30
Question No. 31 To 35
Question No. 36 To 40
Question No. 41 To 45
Question No. 46 To 50
Question No. 51 To 55

Question No. 56 To 60

Question No. 61 To 65
Question No. 66 To 70
Question No. 71 To 75

Question No. 76 To 80
Question No. 81 To 85
Question No. 86 To 88

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