12th | Accounting for Partnership Firms – Fundamentals| Question No. 16 To 20 | Ts Grewal Solution 2024-2025

X, Y and Z are partners in a firm sharing profits in 2 : 2 : 1 ratio. The fixed capitals of the partners were : X  `5,00,000; Y  ` 5,00,000 and Z  ` 2,50,000 respectively. The Partnership Deed provides that interest on capital is to be allowed @ 10% p.a. Z is to be allowed a salary of  ` 2,000 per month. The profit of the firm for the year ended 31st March, 2024 after debiting Z's salary was  ` 4,00,000.
Prepare Profit and Loss Appropriation Account.

Profit and Loss Appropriation Account for the year ended 31st March 2024
Dr.					Cr.
Particulars			`	Particulars	`
Interest on Capital:				Profit and Loss A/c (Net Profit after Z’s salary)	4,00,000
X’s Capital A/c		50,000
Y’s Capital A/c		50,000
Z’s Capital A/c		25,000	1,25000
Profit transferred to:
X’s Capital A/c	1,10,000
Y’s Capital A/c	1,10,000
Z’s Capital A/c	55,000		2,75,000
			4,00,000		4,00,000

Working Notes:

WN 1 Salary to Z has not been debited to Profit and Loss Appropriation Account. This is because Profit of ` 4,00,000 is given after adjusting the Z’s salary.

WN 2Calculation of Interest on Capital

 

Interest on X^' s Capital=5,00,000×10/100=50,000

Interest on Y's Capital=5,00,000×10/100=50,000

Interest on Z' s Capital=2,50,000×10/100=25,000

         
WN 3Calculation of Profit Share of each Partner

Divisible of Profit after Interest on Capital = ` 4,00,000-`1,25,000 = ` 2,75,000

Profit sharing ratio = 2 : 2 : 1

Profit share of  X' s =5,00,000×2/5=1,10,000

Profit share of  Y' s =5,00,000×2/5=1,10,000

Profit share of  Z' s=5,00,000×1/5=55,000

 

X and Y are partners sharing profits in the ratio of 3 : 2 with capitals of  ` 8,00,000 and  ` 6,00,000 respectively. Interest on capital is agreed @ 5% p.a. Y is to be allowed an annual salary of  ` 60,000 which has not been withdrawn. Profit for the year ended 31st March, 2024 before interest on capital but after charging Y's salary amounted to  ` 2,40,000.
A provision of 5% of the profit is to be made in respect commission to the manager. Prepare an account showing the allocation profits.

Profit and Loss Account for the year ended 31st March 2024
Dr.			Cr.
Particulars	( `)	Particulars	( `)
Manager’s Commission (3,00,000×5%)	15,000	Profit and Loss A/c (Net Profit after Y’s salary)	2,40,000
		Y’s Salary	60,000
Profit transferred to Profit and Loss
Appropriation A/c	2,85,000
	3,00,000		3,00,000

 

Profit and Loss Appropriation Account for the year ended 31st March 2024
Dr.				Cr.
Particulars		( `)	Particulars	( `)
Salary to Y		60,000	Profit and Loss Adjustment A/c	2,85,000
Interest on Capital:			(After manager’s commission)
X’s Capital A/c	40,000
Y’s Capital A/c	30,000	70,000
Profit transferred to:
X’s Capital A/c	93,000
Y’s Capital A/c	62,000	1,55,000
		2,85,000		2,85,000

Working Notes:

WN 1Calculation of Manager’s Commission

Profit for making Managers’ Commission = 2,40,000 + 60,000 (Y’s Salary) =  `3,00,000

Manager's Commission=₹3,00,000×5/100=₹15,000

WN 2Calculation of Interest on Capital

Interest on X's Capital A/c=₹8,00,000×5/100=₹40,000Interest on Y's Capital A/c=₹6,00,000×5/100=₹30,000

 

WN 3Calculation of Profit Share of each Partner

Profit available for distribution = 2,85,000- ` 60,000 - ` 70,000 =  `1,55,000

X's Share of Profit=₹1,55,000×3/5=₹93,000

Y's Share of Profit=₹1,55,000×2/5=₹62,000

 

Atul and Mithun are partners sharing profits in the ratio of 3: 2

Balances as on 1st April 2023 were as follows:

Capital Accounts (fixed): Atul- `5,00,000 and Mithun- `6,00,000

Loan Accounts: Atul - `3,00,000 (Cr.) and Mithun - `2,00,000 (Dr.)

It was agreed to allow and charge interest @ 8% p.a. Partnership Deed provided to allow interest on capital @ 10% p.a. Interest on Drawings was charged `5,000 each.

Profit before giving effect to above was `2,28,000 for the year ended 31st March, 2024.

Prepare Profit and Loss Appropriation Account.

 

	Profit and Loss Appropriation Account
Dr.							Cr.
Particulars			`	Particulars			`
Interest on Capital:				Profit and Loss A/c (Net Profit)			2,20,000
Atul’s Current A/c		50,000		Interest on Drawings:
Mithul’s Current A/c		60,000	1,10,000	Atul’s Current A/c		5,000
				Mithul’s Current A/c		5,000	10,000
Profit transferred to:
Atul’s Current A/c		72,000
Mithul’s Current A/c		48,000	1,20,000
			2,30,000				2,30,000

 

Working Notes:

WN1Profit After allowed and charged Atul and Mithul Respectively

2,28,000 -24,000 +16,000 = 2,20,000

WN2interest allowed on loan given by Atul

Interest on  loan =3,00,000×8/100 = 24,000

 

WN3interest Charged on loan given to Mithul

Interest on  loan=2,00,000×8/100=16,000

 

WN4Calculation of Interest on Capital

Interest on Atul’s loan=5,00,000×10/100=50,000

Interest on Mithul's loan=6,00,000×10/100=60,000

 

WN5 Calculation of Profit Share of each Partner

Profit Share ofAtul =1,20,000×3/5=72,000

Profit Share ofMithul =1,20,000×2/5=48,000

 

Reema and Seema are partners sharing profits equally. The Partnership Deed provides that both Reema and Seema will get monthly salary of ` 15,000 each, Interest on Capital will be allowed @ 5% p.a. and Interest on Drawings will be charged @ 10% p.a. Their capitals were ` 5,00,000 each and drawings during the year were ` 60,000 each.
The firm incurred a loss of ` 1,00,000 during the year ended 31st March, 2024.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2024

Profit and Loss Appropriation Account for the year ended March 31, 2024
Dr.						Cr.
Particulars		`	Particulars		`
Profit and Loss A/c (loss)		1,00,000	Interest on Drawings A/c:
			Reema’s Capital A/c	3,000
			Seema’s Capital A/c	3,000	6,000
			Loss transferred to
			Reema’s Capital A/c	47,000
			Seema’s Capital A/c	47,000	94,000
		1,00,000			1,00,000

Note: Since the firm has incurred loss, no interest on capital and salary will be allowed to the partners. However, interest on drawings will be charged from each of them @ 10% p.a. on the amounts withdrawn by them for an average period of six months.

 

Bhanu and Partab are partners sharing profits equally. Their fixed capitals as on 1st April, 2023 are ` 8,00,000 and  ` 10,00,000 respectively. Their drawings during the year were  ` 50,000 and  ` 1,00,000 respectively. Interest on Capital is a charge and is to be allowed @ 10% p.a. and interest on drawings is to be charged @ 15% p.a. Net Profit for the year ended 31st March, 2024was  ` 1,20,000.
Prepare Profit and Loss Appropriation Account.

Profit and Loss Appropriation Account for the year ended March 31, 2024
Dr.								Cr.
Particulars			( `)	Particulars			( `)
Interest on Capital A/c:				Profit and Loss A/c			1,20,000
Bhanu’s Current A/c		80,000		Interest on Drawings A/c:
Partap’s Current A/c		1,00,000	1,80,000	Bhanu’s Current A/c	3,750
				Partap’s Current A/c		7,500	11,250
				Loss transferred to
				Bhanu’s Current A/c		24,375
				Partap’s Current A/c		24,375	48,750
			1,80,000				1,80,000