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12th | Accounting for Partnership Firm – Fundamental | Question No. 66 To 70 | Ts Grewal Solution 2023-2024

Question 66:


Simrat and Bir are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March, 2023 after closing the books of account, their Capital Accounts stood at  ` 4,80,000 and  ` 6,00,000 respectively. On 1st May, 2022, Simrat introduced an additional capital of  ` 1,20,000 and Bir withdrew  ` 60,000 from his capital.On 1st October, 2022, Simrat withdrew  ` 2,40,000 from her capital and Bir introduced  ` 3,00,000. Interest on capital is allowed at 6% p.a. Subsequently, it was noticed that interest on capital @ 6% p.a. had been omitted. Profit for the year ended 31st March, 2023 amounted to  ` 2,40,000 and the partners' drawings had been: Simrat –  ` 1,20,000 and Bir –  ` 60,000. Compute the interest on capital if the capitals are (a) fixed, and (b) fluctuating.

Answer:

Case 1: If Capitals are fixed:

Calculation of Interest on Capital

Interest on Capital Simrat=(6,00,000×6×1/100×12)+(7,20,000×6×5/100×12)+(4,80,000×6×6/100×12)=35,400

Interest on Capital Bir=(3,60,000×6×1/100×12)+(3,00,000×6×5/100×12)+(6,00,000×6×6/100×12)=27,300

Working Notes:

WN1: Calculation of Opening Capital:

Particulars

Simrat

Bir

Capital at the end

4,80,000

6,00,000

Add: Drawings out of capital

2,40,000

60,000

Less: Fresh capital introduced

1,20,000

3,00,000

Capital at the beginning

6,00,000

3,60,000

 

 

 

 

Case2: If Capitals are Fluctuating:

Calculation of Interest on Capital

Interest on Capital Simrat=(5,76,000×6×1/100×12)+(6,96,000×6×5/100×12)+(4,56,000×6×6/100×12)= 33,960

Interest on Capital Bir=(3,24,000×6×1/100×12)+(2,64,000×6×5/100×12)+(5,64,000×6×6/100×12)= 25,140

Working Notes:

WN1: Calculation of Opening Capital:

Particulars

Simrat

Bir

Capital at the end

4,80,000

6,00,000

Add: Drawings out of capital

2,40,000

60,000

Add: Drawings out of profit

1,20,000

60,000

Less: Fresh capital introduced

1,20,000

3,00,000

Less: Profit already credited

1,44,000

96,000

Capital at the beginning

5,76,000

3,24,000

 

 

 

 

 

Question 67:


Mita and Usha are partners in a firm sharing profits in the ratio of 2 : 3. Their Capital Accounts as on 1st April, 2015 showed balances of  ` 1,40,000 and  ` 1,20,000 respectively. The drawings of Mita and Usha during the year 2015-16 were  ` 32,000 and  ` 24,000 respectively. Both the amounts were withdrawn on 1st January 2016. It was subsequently found that the following items had been omitted while preparing the final accounts for the year ended 31st March, 2016:
(a) Interest on Capital @ 6% p.a.
(b) Interest on Drawings @ 6% p.a.
(c) Mita was entitled to a commission of 
` 8,000 for the whole year.
Showing your working clearly, pass a rectifying entry in the books of the firm.

Answer:

Journal

Particular

L.F.

Debit

( `)

Credit

( `)

Usha’s Capital A/c

Dr.

 

6,816

 

To Mita’sCapital A/c

 

 

6,816

(Adjustment made)

 

 

 

 

Particular

Mita

Usha

Total

Interest on Capital @ 6% p.a.

8,400

7,200

(15,600)

Interest on Drawings @ 6% p.a.

(480)

(360)

840

Commission

8,000

(8,000)

Right Share

15,920

6,840

(22,760)

Wrong Share

(9,104)

(13,656)

22,760

Net Effect

6,816

(Cr.)

6,816

(Dr.)

Nil

 

 

 

 

 

Question 68;


A, B and C were partners. Their fixed capitals were `60,000, `40,000 and `20,000 respectively. Their profit sharing ratio was 2 :2 : 1. According to the Partnership Deed, they were entitled to interest on capital @ 5% pa. In addition, 8 was also entitled to draw a salary of `1,500 per month. C was entitled to a commission of 5% on the profits after charging the interest on capital, but before charging the salary payable to B. The net profits for the year, `80,000, were distributed in the ratio of their capitals without providing for any of the above adjustments. Showing your workings clearly, pass the necessary adjustment entry. (CBSE 2019)

 

Answer;

 

Date

Particulars

 

L.F.

Dr.`

Cr. `

31 March

A’s  current      A/c    

     To B ’s  current      A/

     To C’s  current      A/

(Being omission of salary , interest on capital , commission now profit corrected)

Dr.

 

 

 

16,080

 

 

14,253

1,827

 

 

 

 

 

 

16,080

16,080

 

 Correct Profit and loss appropriation account year ended 31 March

 

Particulars

`

Particulars

`

To cc

B=1500×12=18,000

To Commission

(C=80,000-6,000×5/100)

 

To Interest on capital

A-60,000×5/100=3,000

B-40,000×5/100=2,000

C-20,000×5/100=1,000

To profit

A-52,300×2/5=20,920

B -52,300×2/5=20,920

C -52,300×1/5=10,460

 

 

18,000

 

3,700

 

 

 

 

6,000

 

 

 

52,300

By  Net profit

 

80,000

4,500

 

80,000

 

80,000

 

Statement showing Adjustments

 

Particulars

A

B

C

FIRM

Dr.

Cr.

Dr.

Cr.

Dr.

Cr.

Dr.

Cr.

Interest on capital

Salary omitted

Commission omitted

Correct Profit omitted

Wrong Profit credited

 

 

 

 

40,000

3,000

 

 

20,920

 

 

 

 

26,667

2,000

18,000

 

20,920

 

 

 

 

13,333

1,000

 

3,700

10,460

6,000

18,000

3,700

52,300

 

 

 

 

80,000

Total

40,000

23,920

26,667

40,000

 

 

80,000

80,000

Net effect

16,080

 

 

14,263

 

1,827

 

 

 

Question 69: Pranav, Karan and Rahim were partners sharing profits in the ratio of 3:2:1. Their capitals were 5,00,000, 3,00,000 and 2,00,000 respectively as on 1st April, 2022. According to the partnership deed, they were entitled to an interest on capital at 10% p.a. Forthe year ended 31st March, 2022, profit of 78,000 was distributed among the partners without providing for interest on capitals.


Pass the necessary adjusting entry and show the working clearly.

Answer:

JOURNAL

Date

Particulars

 

LF

Dr. (Rs.)

Cr. (Rs.)

2023

Rahim's capital A/c

Dr.

 

3,000

 

31st March

To Karan’s capital A/c

 

 

 

3,000

 

(Being Interest on capital was omitted now adjusted)

 

 

 

 

 

 

 

 

 

 

 

1. Interest on capital: Pranav - 50000; Karan - 30000; Rahim - 20000.

Total interest on capital was to be credited = 1,00,000, Which is more than the profit  78,000.

2. Profit is to be distributed in the ratio of interest on capital which is 5:3:2

Pranav =78,000 × 5/10 =  39,000

Karan=78,000 × 3 = 23,400

Rahim =78,000 × 2 / 10 = 15,600

3. Wrongly distributed as follow in profit sharing ratio 3:2:1

Pranav =78,000×3/6= 39,000

Karan =78,000×2/6= 26,000

Rahim =78,000×1/6= 13,000

4. Calculation of amount to be adjusted

 

Pranav

Karan

Rahim

Amount to be credited

39,000

23,400

15,600

Wrongly Amount to be credited

39,000

26,000

13,000

 

nil

2,600

2,600

 

 

Question 70:


On 31st March, 2023, after the closing of the accounts, the Capital Accounts of P, Q and R stood in the books of the firm at  ` 40,000;  ` 30,000 and  ` 20,000 respectively. Subsequently, it was noticed that interest on capital @ 5% had been omitted. Profit for the year ended 31st March, 2023 was  ` 60,000 and the partners' drawings had been P   ` 10,000, Q  ` 7,500 and R   ` 4,500.  Profit-sharing ratio of P, Q and R is 3 : 2 : 1.

Give necessary adjustment entry.

Answer:

Journal

Date

Particulars

L.F.

Debit

( `)

Credit

( `)

2023

Mar.31


P’s Current A/c


Dr.

 


300

 

 

To Q’s Capital A/c

 

 

8

 

To R’s Capital A/c

 

 

292

 

(Interest on Capital was omitted, now adjusted)

 

 

 

 

 

 

 

 


Working Notes:

 

WN 1Calculation of Capital at the beginning (as on April 01, 2022)

 

Particulars

P

Q

R

Capital as on March 31, 2022(Closing)   

40,000

30,000

20,000

Add: Drawings

10,000

7,500

4,500

Less: Profit ` 60,000 (3:2:1)

(30,000)

(20,000)

(10,000)

Capital as on April 01, 2022 (Opening)

20,000

17,500

14,500

 

 

 

 


WN 2Calculation of Interest on Capital

Interest on P’s capital=20,000×5/100=1000

Interest on Q’s capital=17,500×5/100=875
Interest on R’s capital=14,500×5/100=725
WN 3

Statement Showing Adjustment

Particulars

P

Q

R

Total

Interest on Capital (to be credited)            

1,000

875

725

2,600

For sharing above Loss (3:2:1)

(1,300)

(867)

(433)

(2,600)

Net Effect

(300)

8

292

NIL

 

 

 

 

 

 

 

Ts Grewal Solution 2023-2024

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Class 12 / Volume – I

Chapter 1 – Accounting For Partnership Firms Fundamentals

 

Question No. 1 To 5
Question No. 6 To 10
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Question No. 16 To 20
Question No. 21 To 25
Question No. 26 To 30
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