Question 56;

Kabir, Zoravar and Parul are partners sharing prohts in the ratio of 5 :3 :2.Their capitals as on 1st April, 2025 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, 2026 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, 2026.

 

Answer;

 

Working note;

 

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

 

Adjusting and Transfer Entries

Question 57:

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. The error is now to be corrected.

Give necessary Journal entry for the same.

Answer:

 

 

 

 

 

Working Note:

Total Profits for Last 3 years = 1,40,000 + 84,000 + 1,06,000 = ₹ 3,30,000

 

Question 58:

Atul and Gita vwere partners in a firm sharing profits and losses in the ratio of 3:2. Their fixed capitals were ₹ 4,00,000 and ₹ 2,00,000 respectively. After the accounts for the year were prepared, it was noticed that interest on capital @ 6% p.a. as provided in the partnership deed, was not credited to the capital accounts of partners before distribution of profits. (CBSE 2025)

Pass the necessary adjusting Journal entry. Show your workings clearly.

Answer:

 

Interest on Capital was to be Credited

Atul = 4,00,000×6÷100= 24,000

Gita = 2,00,000×6÷100= 12,000

 

Adjustment Table

 

Question 59:

Ram, Mohan and Sohan sharing profits and losses equally have capitals of  ₹ 1,20,000,  ₹ 90,000 and  ₹ 60,000 respectively. For the year ended 31st March, 2025, interest was credited to them @ 6% instead of 5%.
Give adjustment Journal entry.

Answer:

Working Notes:

WN 1Calculation of Interest on Capital at 6% p.a.

Interest on Ram’s capital=1,20,000×6/100=7,200

Interest on Mohan’s capital=90,000×6/100=5,400

Interest on Sohan’s capital=60,000×6/100=3,600

 

WN 2Calculation of Interest on Capital at 5% p.a.

Interest on Ram’s capital=1,20,000×5/100=6,000

Interest on Mohan’s capital=90,000×5/100=4,500

Interest on Sohan’s capital=60,000×5/100=3,000

 

WN 3

 

Question 60:

Ram, Shyam and Mohan were partners in a firm sharing profits and losses in the ratio of 2 : 1 : 2. Their capitals were fixed at  ₹ 3,00,000,  ₹ 1,00,000,  ₹ 2,00,000. For the year ended 31st March, 2025, interest on capital was credited to them @ 9% instead of 10% p.a. The profit for the year before charging interest was  ₹ 2,50,000.
Show your working notes clearly and pass necessary adjustment entry.

Answer:

Working Notes:

 

WN 1 Calculation of Interest on Capital 10% p.a.

Interest on Ram’s capital=3,00,000×10/100=30,000

Interest on Shyam’s capital=1,00,000×10/100=10,000

Interest on Mohan’s capital=2,00,000×10/100=20,000

 

WN 2 Calculation of Interest on Capital 9% p.a.

Interest on Ram’s capital=3,00,000×9/100=2,7000

Interest on Shyam’s capital=1,00,000×9/100=9,000

Interest on Mohan’s capital=2,00,000×9/100=18,000

 

WN 3