Question 26:
Naresh and Sukesh are partners
with capitals of ` 3,00,000 each
as on 31st March, 2024. Naresh had withdrawn `
50,000 against capital on 1st October, 2023 and also `
1,00,000 besides the drawings against capital. Sukesh
also had drawings of ` 1,00,000.
Interest on capital is to be allowed @ 10% p.a.
Net profit for the year was ` 2,00,000, which is yet to be distributed.
Pass the Journal entries for interest on capital and distribution of profit.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ( `) |
Credit ( `) |
|
|
2023 |
|
|
|
|
|
|
March 31 |
Profit & Loss Appropriation A/c |
Dr. |
|
82,500 |
|
|
|
To Naresh’s
Capital A/c |
|
|
|
42,500 |
|
|
To Sukesh’s
Capital A/c |
|
|
|
40,000 |
|
|
(Interest on capital transferred to Profit & Loss
Appropriation A/c) |
|
|
|
|
|
|
|
|
|
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|
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|
Profit & Loss Appropriation A/c |
Dr. |
|
1,17,500 |
|
|
|
To Naresh’s
Capital A/c |
|
|
|
58,750 |
|
|
To Sukesh’s
Capital A/c |
|
|
|
58,750 |
|
|
(Profit transferred to Partners’ Capital A/c) |
|
|
|
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|
Working Notes:
WN1: Calculation of Opening Capital:
|
Particulars |
Naresh |
Sukesh |
|
Capital at the end |
3,00,000 |
3,00,000 |
|
Add: Drawings out of capital |
50,000 |
- |
|
Add: Drawings against profit |
1,00,000 |
1,00,000 |
|
Capital at the beginning |
4,50,000 |
4,00,000 |
WN2: Calculation of Interest on Capital
Naresh=(4,50,000×10×6/100×12)+(4,00,000×10×6/100×12)=` 42,500
Sukesh=4,00,000×10/100=` 40,000
Question 27:
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 28: 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 29:
Following is the extract of
the Balance Sheet of Neelkant and Mahadev
as on 31st March, 2024.
|
BALANCE SHEET |
|||
|
Liabilities |
` |
Assets |
` |
|
Neelkant's Capital |
10,00,000 |
Sundry Assets |
30,00,000 |
|
Mahadev's Capital |
10,00,000 |
|
|
|
Neelkant's Current A/c |
1,00,000 |
|
|
|
Mahadev' Current A/c |
1,00,000 |
|
|
|
Profit and Loss A/c (2023-23) |
8,00,000 |
|
|
|
|
30,00,000 |
|
30,00,000 |
|
|
|
|
|
During the year, Mahadev's drawings were ` 30,000. Profits during the year
ended 31st March, 2023 is
`
10,00,000. Calculate interest on capital @ 5% p.a. for the year ending 31st
March, 2023.
Answer:
Interest on Capital
|
Neelkant’s |
= 10,00,000×5/100=50,000 |
|
Mahadev’s |
= 10,00,000×5/100=50,000 |
Note: In this
question, as the balances of both Partner's Capital Account and of Partner's
Current Account are mentioned, so it is clear 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 30:
From the following Balance
Sheet of Long and Short, calculate interest on capital @ 8% p.a. for the year
ended 31st March, 2024.
|
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, 2023)
|
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
Ts Grewal Solution 2024-2025
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Class 12 | Volume I