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12th | Accounting for Partnership Firm – Fundamental | Question No. 26 To 30 | Ts Grewal Solution 2023-2024

Question 26:


Naresh and Sukesh are partners with capitals of  ` 3,00,000 each as on 31st March, 2023. Naresh had withdrawn  ` 50,000 against capital on 1st October, 2022 and also  ` 1,00,000 besides the drawings against capital.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)

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

             

 

 

 

 

 

 

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, 2023.

BALANCE SHEET
as at 31st March, 2023

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 (2022-23)

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, 2023.
 

BALANCE SHEET
as at 31st March, 2023

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, 2022)

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 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
Question No. 11 To 15
Question No. 16 To 20
Question No. 21 To 25
Question No. 26 To 30
Question No. 31 To 35
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