Question
26:
On 1st
April, 2013, Jay and Vijay entered into partnership for supplying laboratory
equipments to government schools situated in remote and backward areas. They
contributed capitals of
`
80,000 and ` 50,000 respectively and agreed to
share the profits in the ratio of 3 : 2. The partnership Deed provided that
interest on capital shall be allowed at 9% per annum. During the year the firm
earned a profit of ` 7,800.
Showing your
calculations cleary, prepare 'Profit and Loss
Appropriation Account' of Jay and Vijay for the year ended 31st March, 2014.
Answer:
|
Profit and Loss Appropriation
Account for the year ended March 2014 |
||||
|
Dr. |
|
Cr. |
||
|
Particulars |
` |
Particulars |
` |
|
|
Interest on Capital A/c: |
|
Profit and Loss A/c |
7,800 |
|
|
Jay' s Capital |
4,800 |
|
|
|
|
Vijay' s Capital |
3,000 |
7,800 |
|
|
|
|
|
|
|
|
|
|
7,800 |
|
7,800 |
|
|
|
|
|
|
|
Working
Notes:
WN1: Calculation of Interest on Capital
Interest on Jay' s Capital=80,000×9/100=7,200
Interest on Vijay' s Capital=50,000×9/100=4,500
Total
interest = 7,200+4,500 =11,700
WN2: Calculation of Proportionate Interest on
Capital
Jay' s proportion of interest =7,800×7,200/11,700=4,800
Vijay's
proportion of interest =7,800×4,500/11,700=3,000
Note:
Interest on capital is to be treated as an appropriation of profits and is to
be provided to the extent of available profits i.e. ` 7,800.
Question 27: A and B are
partners in the ratio of 3:2. The firm maintains Fluctuating Capital Accounts
and the balance of the same as on 31st March, 2020 amounted to 1,60,000 and 1,40,000 for A and B respectively. Their
drawings during the year were 30,000 each.
As per
Partnership Deed, interest on capital@ 10% p.a. on opening capitals had been
provided to them.
Calculate
opening capitals of partners given that their profit was 90,000. Show your
workings clearly.
Answer:
Calculation
of opening Capital
|
|
A |
B |
|
Closing Capital Add; Drawings |
1,60,000 30,000 |
1,40,000 30,000 |
|
Less: Profit already Credited
(WN) |
1,90,000 37,800 |
1,70,000 25,200 |
|
Less: Interest on Capital (WN) |
1,52,200 13,836 |
1,44,800 13,164 |
|
Opening Capital |
1,38,364 |
1,31,636 |
Working Notes:
|
Total Capital of A and B (1,60,000+1,40,000) Add: Drawings (30,000×2) |
= = |
3,00,000 60,000 |
|
Less: Profits (Including Interest on
Capital) |
= |
3,60,000 90,000 |
|
Total opening Capital Including Interest on Capital |
= |
2,70,000 |
Interest on Capital @10 p.a. 2,70,000
is 27,000
Divisible Profits= 90,000 - 27,000 = 63,000
Distribution of profits
A =
63,000×3/5=37,800
B =
63,000×2/5=25,200
Individual interest on Capital
A= 1,52,200×10/110=13,836
B= 1,44,800×10/110=13,164
Question 28:
Vinod and Mohan are partners sharing profitns
and losses in the ratio of 4:3. From the following Blalnce
sheet, calculate interest on Capital @ 6% p.a. for the year ended 31st
March, 2025:
|
BALANCE SHEET as
at 31st March, 2025 |
||||
|
Liabilities |
|
₹ |
Assets |
₹ |
|
Capital A/cs: |
|
|
Sundry Assets |
2,76,000 |
|
Vinod |
1,60,000 |
|
|
|
|
Mohan |
80,000 |
2,40,000 |
|
|
|
Profit and loss Appropriation A/c (2024-25) |
|
36,000 |
|
|
|
|
|
2,76,000 |
|
2,76,000 |
During the year, Vinod’s drawings were ₹ 20,000 and Monhan’s drawings ₹ 12,000. Profit during the year
was ₹ 64,000.
Answer:
Calculation of opening capital
|
Closing
capital |
1,60,000 |
80,000 |
|
Add;
Drawings |
20,000 |
12,000 |
|
|
1,80,000 |
92,000 |
|
Less:
Profits |
16,000 |
12,000 |
|
Opening Capital |
1,64,000 |
80,000 |
|
|
|
|
|
Interest on capital |
=
1,64,000×6/100 |
=
80,000×6/100 |
|
|
=
9,840 |
=
4,800 |
Question
29:
From the
following Balance Sheet of Long and Short, calculate interest on capital @ 8%
p.a. for the year ended 31st March, 2025.
|
BALANCE SHEET |
||||
|
Liabilities |
` |
Assets |
` |
|
|
Long's Capital A/c |
1,20,000 |
Fixed Assets |
3,00,000 |
|
|
Short's Capital A/c |
|
1,40,000 |
Other Assets |
60,000 |
|
General Reserve |
|
1,00,000 |
|
|
|
|
3,60,000 |
|
3,60,000 |
|
|
|
|
|
|
|
During the year, Long withdrew `
40,000 and Short withdrew ` 50,000. Profit for the year was ` 1,50,000 out of which ` 1,00,000 was transferred to General
Reserve.
Answer:
Calculation of Capital at the beginning (as on April 01, 2025)
|
Particulars |
Long |
Short |
|
Capital at the end |
1,60,000 |
1,40,000 |
|
Less: Adjusted Profit (1,50,000 –
1,00,000) in 1:1 ratio |
(25,000) |
(25,000) |
|
Add: Adjusted Drawings |
- |
50,000 |
|
Capital in the beginning |
1,35,000 |
1,65,000 |
|
|
|
|
Long’s Interest on capital= 1,35,000×8/100=10,800
Short’s Interest on capital= 1,65,000×8/100=13,200
Question
30:
Amit and Bramit started business on 1st April, 2024 with capitals of ` 15,00,000 and ` 9,00,000 respectively. On 1st
October, 2024, they decided that their capitals should be `
12,00,000 each. The necessary adjustments in capitals were made by introducing
or withdrawing by cheque. Interest on capital is
allowed @ 8% p.a. Compute interest on capital for the year ended 31st March,
2025.
Answer:
Calculation of Interest on Amit’s
Capital
|
Date |
Capital |
× |
Period |
= |
Product |
|
April 01, 2024 to Sept. 30, 2024 |
15,00,000 |
× |
6 |
= |
90,00,000 |
|
Oct. 01, 2024 to March 31, 2024 |
12,00,000 |
× |
6 |
= |
72,00,000 |
|
Sum of Product |
|
1,62,00,000 |
|||
|
|
|
||||
Interest
on Capital = sum of product×Rate of drawing/100×1/ 12
Interest
on Capital =1,62,00,000×8/100×1/12 =1,08,000
Calculation of Interest on Bramit’s
Capital
|
Date |
Capital |
× |
Period |
= |
Product |
|
April 01, 2024 to Sept. 30, 2024 |
9,00,000 |
× |
6 |
= |
54,00,000 |
|
Oct. 01, 2024 to March 31, 2024 |
12,00,000 |
× |
6 |
= |
72,00,000 |
|
Sum of Product |
|
1,26,00,000 |
|||
|
|
|
||||
Interest
on Capital = sum of product×Rate of drawing/100×1/ 12
Interest
on Capital =1,26,00,000×8/100×1/12 =84,000