4 Marks Question - Accountancy STD 12 Commerce Questions - Vidyadip

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Question 14 Marks

Singh and Gupta decided to start a partnership firm to manufacture low cost jute bags as plastic bags were creating many environmental problems. They contributed capitals of ₹ $1,00,000$ and ₹ $50,000$ on $1^{st}$ April, $2012$ for this. Singh expressed his willingness to admit Shakti as a partner without capital, who is specially abled but a very creative and intelligent friend of his. Gupta agreed to this. The terms of partnership were as follows:

Singh, Gupta and Shakti will share profits in the ratio of $2 : 2 : 1$.
Interest on capital will be provided @ $6\%$ p.a.

Due to shortage of capital, Singh contributed ₹ $25,000$ on $30^{th}$ September, $2012$ and Gupta contributed ₹ $10,000$ on $1^{st}$ January, $2013$ as additional capital. The profit of the firm for the year ended $31^{st}$ March, $2013$ was ₹ $1,68,900$.

Identify any two values which the firm wants to communicate to the society.
Prepare Profit and Loss Appropriation Account for the year ending $31^{st}$ March, $2013$.

Answer

Values highlighted:

i.	Recognition of talent.
ii.	Responsible citizen.
iii.	Environment Concern.
iv.	Helping, caring and sharing towards specially abled people.

Working Notes:

Interest on Singh’s Capital = 1,00,000 x 6/100 + 25,000 x 6/100 x 6/12 = 6,750

Interest on Gupta’s Capital = 50,000 x 6/100 + 10,000 x 6/100 x 3/12 = 3,150

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Question 24 Marks

A and B entered into partnership on 1st April 2009 without any partnership deed. They introduced capitals of ₹ 5,00,000 and ₹ 3,00,000 respectively. On 31st October 2009, A advanced ₹ 2,00,000 by way of loan to the firm without any agreement as to interest.
The Profit and Loss Account for the year ended 31.3.2010 showed a profit of ₹ 4,30,000, but the partners could' not agree upon the amount of interest on loan to be charged and the basis of division of profits. Pass a journal entry for the distribution of the profit between the partners and prepare the Capital A/c of both the partners and Loan A/c of 'A'.

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Question 34 Marks

A, Band C were partners in a firm. Their capitals were A ₹ 30,000, B Rs. 20,000 and C ₹ 10,000 respectively. According to the partnership deed they were entitled to an interest on capital @ 5% p.a. In addition B was also entitled to draw a salary of ₹ 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 were ₹ 30,000 distributed’ in the ratio of their capitals without providing for any of the above adjustments. The profits were to be shared in the ratio of 2 : 1 : 2. Pass the necessary adjustment entry showing the workings clearly.

Answer

Altetrnate Answer
Working Note:-

	A	B	C
	₹	₹	₹
Closing Capital	30,000	20,000	10,000
Less Profits (3:2:1)	15,000	10,000	5,000
Opening Capital	15,000	10,000	5,000

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Question 44 Marks

A, Band C were partners in a firm having capitals of ₹ 80,000; ₹ 80,000; and ₹ 40,000 respectively. Their current account balances were A : ₹ 10,000; B : ₹ 5,000 and C : ₹ 2,000 (Dr). According to the partnership deed the partners were entitled to interest on capital @ 5% p.a. C being the working partner was also entitled to a salary of ₹ 6,000 p.a. The profits were to be divided as follows:

The first ₹ 20,000 in proportion to their capitals.
Next ₹ 30,000 in the ratio of 5 : 3 : 2.
Remaining profits to be shared equally.

The firm made a profit of ₹ 1,56,000 before charging any of the above items. Prepare the Profit and Loss Appropriation Account and pass the necessary journal entry for the appropriation of profits.

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Question 54 Marks

Kumar and Raja were partners in a firm sharing profits in the ratio of 7 : 3. Their fixed capitals were: Kumar Rs. 9,00,000 and Raja Rs. 4,00,000. The partnership deed provided for the following but the profit for the year was distributed without providing for: .

interest on capital @ 9% per annum.
Kumar’s salary Rs. 50,000 per year and Raja’s salary Rs. 3,000 per month.

The profit for the year ended 31.3.2007 was Rs. 2,78,000. Pass the adjustment entry.

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Question 64 Marks

Lalan and Balan were partnersin. a firm sharing profitsin the ratio of 3 : 2. Their fixed capitals on 1.4.2010 were: Lalan ₹ 1,00,000 and Balan ₹ 2,00,000. They agreed to allow interest on capital @ 12% per annumand to charge on drawings @ 15% per annum. The firm earned a profit, before all above adjustments, of ₹ 30,000 forthe year ended 31.3.2011.The drawings of Lalan and Balan during the year were ₹ 3,000 an ₹ 5,000 respectively. Showing your calculations, clearly prepare Profit and Loss Appropriation A/c of Lalan and Balan. The interest on capital. will be allowed even if the firm incurs a loss.

Answer

$\text{Lalan}=3,000\times\frac{15}{100} \frac{6}{12}=225$

$\text{Balan}=5,000\times\frac{15}{100} \frac{6}{12}=375$

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Question 74 Marks

Satnam and Qureshi after doing their MBA decided to start a partnership firm to manufacture ISI marked electronic goods for economically weaker section of the society. Satnam also expressed his willingness to admitJuliee as a partner without capital who is specially abled but a very creative and intelligent friend of him. Qureshi agreed to this. They formed a partnership on $1^{st}$ April 2012on the following terms:

Satnam will contribute ₹ $4,00,000$ and Qureshi will contribute ₹ $2,00,000$ as capitals.
Satnam, Qureshi andJuliee will share profits in the ratio of $2: 2 : 1$.
Interest on capital will be allowed @ $6\%$ p.a.

Due to shortage of capital Satnam contributed ₹ $50,000$ on $30^{th}$ September, $2012$ and Qureshi contributed ₹ $20,000$ on $1^{st}$ January, $2013$ as additional capitals. The profit of the firm for the year ended $31^{st}$ March, $2013$ was ₹ $3,37,800$.

Identify any two values which the firm wants to communicate to the society.
Prepare Profit & Loss Appropriation Account for the year ending $31st$ March, $2013$.

Answer

Values highlighted:

Adherence to law to manufacture ISI marked electronic goods.
Sensitivity towards specially abled people.
Providing employment opportunities to economically weaker section.
Encouragement to women entrepreneurship.

Working notes:
Calculation of Interest on Capital:

Interest on Satnam’s Capital:

(4,00,000 x 6/100) + (50,000 x 6/100 x 6/12)

= 2,4000 + 1,500 = ₹ 25,500.

Interest on Qureshi’s Capital:

(2,00,000 x 6/100) + (20,000 x 6/100 x 3/12)

= 12,000 + 300 = ₹ 12,300.

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Question 84 Marks

Satnam and Qureshi after doing their MBA decided to start a partnership firm to manufacture ISI marked electronic goods for economically weaker section of the society. Satnam also expressed his willingness to admit Juliee as a partner without capital who is specially abled but a very creative and intelligent friend of him. Qureshi agreed to this. They formed a partnership on $1^{st}$ April 2012 on the following terms:

Satnam will contribute ₹ 4,00,000 and Qureshi will contribute ₹ 2,00,000 as capitals.
Satnam, Qureshi andJuliee will share profits in the ratio of 2 : 2 : 1.
Interest on capital will be allowed @ 6% p.a.

Due to shortage of capital Satnam contributed ₹ 50,000 on $30^{th}$ September, 2012 and Qureshi contributed ₹ 20,000 on $1^{st}$ January, 2013 as additional capitals. The profit of the firm for the year ended $31^{st}$March, 2013 was ₹ 3,37,800.

Identify any two values which the firm wants to communicate to the society.
Prepare Profit & Loss Appropriation Account for the year ending 31st March, 2013.

Answer

Values highlighted:

Adherence to law to manufacture ISI marked electronic goods.
Sensitive towards specially abled people.
Providing employment opportunities to economically weaker section.
Encouragement to women entrepreneurship.

Working notes:
Calculation of Interest on Capital:

Interest on Satnam’s Capital:

(4,00,000 x 6/100) + (50,000 x 6/100 x 6/12)

= 2,4000 + 1,500 = ₹ 25,500.

Interest on Qureshi’s Capital:

(2,00,000 x 6/100) + (20,000 x 6/100 x 3/12)

= 12,000 + 300 = ₹ 12,300.

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Question 94 Marks

Satnam and Qureshi after doing their MBA decided to start a partnership firm to manufacture ISI marked electronic goods for economically weaker section of the society. Satnam also expressed his willingness to admitJuliee as a partner without capital who is specially abled but a very creative and intelligent friend of him. Qureshi agreed to this. They formed a partnership on$ 1^{st}$ April $2012$ on the following terms:
i. Satnam will contribute $₹ 4,00,000$ and Qureshi will contribute $₹ 2,00,000$ as capitals.
ii. Satnam, Qureshi andJuliee will share profits in the ratio of $2: 2: 1$.
iii. Interest on capital will be allowed @ $6 \%$ p.a.

Due to shortage of capital Satnam contributed ₹ 50,000 on $30^{\text {th }}$ September, $2012$ and Qureshi contributed ₹ $20,000$ on $1^{\text {st }}$ January, $2013$ as additional capitals. The profit of the firm for the year ended $31^{\text {st }}$ March, $2013$ was ₹ $3,37,800.$
a. Identify any two values which the firm wants to communicate to the society.
b. Prepare Profit \& Loss Appropriation Account for the year ending 31st March, $2013.$

Answer

Values highlighted:

Adherence to law to manufacture ISI marked electronic goods.
Sensitive towards specially abled people.
Providing employment opportunities to economically weaker section.
Encouragement to women entrepreneurship.

Working notes:
Calculation of Interest on Capital:

Interest on Satnam’s Capital:

(4,00,000 x 6/100) + (50,000 x 6/100 x 6/12)

= 2,4000 + 1,500 = ₹ 25,500.

Interest on Qureshi’s Capital:

(2,00,000 x 6/100) + (20,000 x 6/100 x 3/12)

= 12,000 + 300 = ₹ 12,300.

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Question 104 Marks

Arun and Arora were partners in a firm sharing profits in the ratio of 5 : 3. Their fixed capitals on 1-4-2010 were: Arun ₹ 60,000 and Arora ₹ 80,000. They agreed to allow interest on capital @ 12% p.a. and to charge on drawings @ 15% p.a. The profit of the firm for the year ended 31-3-2011 before all above adjustments were ₹ 12,600. The drawings made by Arun were ₹ 2,000 and by Arora ₹ 4,000 during the year. Prepare Profit and Loss Appropriation Account of Arun and Arora. Show your calculations clearly. The interest on capital will be allowed even if the firm incurs loss.

Answer

Note:- Interest on drawings to be calculated for 6 months because time period is not given:
$\text {Arun}= 2,000\times\frac {15}{100}\times\frac{6}{12}= 150\\ \text{Arora}=4,000\times\frac{15}{100}\times\frac{6}{12}= 300$

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Question 114 Marks

A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. The following was the Balance Sheet of the firm as on 31-3-2010.

The profits ₹ 30,000 for the year ended 31-3-2010 were divided between the partners without allowing interest on capital @ 12% p.a. and salary to A @ ₹ 1,000 per month. During the year A withdrew ₹ 10,000 and B ₹ 20,000.
Pass the necessary adjustment journal entry and show your working clearly.

Answer

Working Note:Calculation of opening capital

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Question 124 Marks

A, B & C were partners.Their capitals were ₹ 30,000; ₹ 20,000 and ₹ 10,000 respectively, According to the partnership deed they were entitled to an interest on capital at 5% p.a. In addition B was also entitled to draw a salary of ₹ 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 were ₹ 30,000, distributed in the ratio of their capitals without providing for any of the above adjustments. The profits were to be shared in the ratio of 2 : 2 : 1. Pass the necessary adjustment entry showing the workings clearly.

Answer

Alternate Answer

Working Note:-

	A	B	C
	₹	₹	₹
Closing Capital	30,000	20,000	10,000
Less Profits (3 : 2 : 1)	15,000	10,000	5,000
Opening Capital	15,000	10,000	5,000

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Question 134 Marks

A, B & C were partners in a firm having capitals of ₹ 60,000; ₹ 60,000 and ₹ 80,000 respectively. Their Current Account balances were A : ₹ 10,000; B: ₹ 5,000 and C: ₹ 2,000 (Dr). According to the partnership deed the partners were entitled to interest on capital @ 5% p.a. C being the working partner was also entitled to a salary of ₹ 6,000 p.a. The profits were to be divided as follows:

The first ₹ 20,000 in proportion to their capitals.
Next ₹ 30,000 in the ratio of 5 : 3 : 2.
Remaining profits to be shared equally.

The firm made a profit of ₹ 1,56,000 before charging any of the above items. Prepare the Profit & Loss Appropriation Account and pass necessary journal entry for apportionment of profit.

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Question 144 Marks

Ravi and Mohan were partners in a firm sharing profits in the ratio of 7:5. Their respective fixed capitals were Ravi Rs. 10,00,000 and Mohan Rs. 7,00,000. The partnership deed provided for the following:

Interest on Capital @ 12% p.a.
Ravi’s salary Rs. 6,000 per month and Mohan’s salary Rs. 60,000 per year.

The profit for the year ended 31.3.2007 was Rs. 5,04,000 which was distributed equally, without providing for the above. Pass an adjustment entry.

Answer

Working notes:

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Question 154 Marks

From the following Receipts and Payments Account of Dee Club for the year ending $31^{st}$ March, $2019$ and additional information, prepare an Income and Expenditure Account for the year ending $31^{st}$ March, $2019$:

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Question 164 Marks

Ram, Mohan and Sohan were partners sharing profits in the ratio of 2 : 1 : 1. Ram withdrew ₹ 3,000 every month and Mohan withdrew ₹ 4,000 every month. Interest on drawings @ 6% p.a. was charged, whereas the partnership deed was silent about interest on drawings. Showing your working clearly, pass the necessary adjustment entry to rectify the error.

Answer

Working Notes:

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Question 174 Marks

Yadu, Vidu and Radhu were partners in a firm sharing profits in the ratio of $4: 3: 3$. Their fixed capitals on $1^{\text {st }}$ April, 2018 were ₹ $9,00,000$, ₹ $5,00,000$ and ₹ $4,00,000$ respectively. On $1^{\text {st }}$ November, $2018$ , Yadu gave a loan of ₹ $80,000$ to the firm. As per the partnership agreement:
i. The partners were entitled to an interest on capital @ $6 \%$ p.a.
ii. Interest on partners' drawings was to be charged @ $8 \%$ p.a.

The firm earned profits of ₹ $2,53,000$ (after interest on Yadu's loan) during the year $2018 - 19$. Partners' drawings for the year amounted to Yadu : ₹$ 80,000$, Vidu : ₹ $70,000$ and Radhu : ₹ $50,000.$
Prepare Profit and Loss Appropriation Account for the year ending $31^{\text {st }}$ March$, 2019.$

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Question 184 Marks

From the following Receipts and Payments Account of Vista Club, prepare an Income and Expenditure Account for the year ended $31^{st}$ March,$ 2019:$

Additional Information:

The club had $50$ members each paying an annual subscription of ₹ $1,500$. Subscriptions in arrears on $31^{st}$ March, $2018$, were ₹ $15,000.$
On $31^{st}$ March,$ 2019:$, outstanding salaries were ₹$ 4,000$.
$8\%$ Investments were made on $31^{st}$ December,$ 2018.$
The club owned machinery of $1,00,000$ on $1^{st}$ April, $2018$. Depreciate machinery $@ 6\%$ p.a.

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Question 194 Marks

A, B and C are partners s profits and losses inthe ratio of 5 : 3 : 1. After the final accounts have been prepared, it was discovered that interest on drawings had not been taken into consideration The interest on drawing ofpartners amounted to A ₹ 8,000, B ₹ 6,000 and C ₹ 4,000. Give the necessary adjusting journal entry.

Answer

Interest charged	on A’s drawings	=	₹ 8,000
Interest charged	on B's drawings	=	₹ 6,000
Interest charged	on C’s drawings	=	₹ 4,000
			₹ 18,000

This amount of ₹18,000 is an item of income for the firm but this has not been recorded on the credit side of P & L Appropriation A/c of the previous year. As such the profit of the previous year will now be increased by this amount. Hence, this profit of ₹ 18,000 will be shared by the partners in their profit sharing ratio of 5 : 3 : 1 which amounts to A ₹ 10,000, B ₹ 6,000 and C ₹ 2,000.

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Question 204 Marks

A, B and C are partners in a firm sharing profits in the ratio of 2 : 2 : 1. According to the terms of the partnership agreement C has to get a minimum of ₹ 6,000, irrespective of the profits of the firm. Any excess payable to C on account of such guarantee shall be borne by A. Profits earned during the year ended 31st March, 2018 were ₹ 25,000. Pass journal entries in the books of the firm.

Answer

Working Note:
Distribution of Profit:
$\text{A}\ 25,000\times\frac{2}{5} = ₹\ 10,000$
$\text{B}\ 25,000\times\frac{2}{5} = ₹\ 10,000$
$\text{C}\ 25,000\times\frac{1}{5} = ₹\ 5,000$
C’s share in profits amounts to ₹ 5,000 whereas the minimum guaranteed amount is ₹ 6,000. Hence, the deficiency will be borne by A.

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Question 214 Marks

List the items which may be debited or credited in capital accounts of the partners when:

Capitals are fixed.
Capital are fluctuating.

Answer

When Capitals are fixed:

The following items are credited in the Partner's Capital Account when capital accounts are fixed.

Opening balance of capital.
Additional capital introduced during an accounting year.

The following items are debited in the Partner's Capital Account when capital accounts are fixed.

Part of capital withdrawn.
Closing balance of capital.

When Capitals are fluctuating:

The following items are credited in the Partner's Capital Account when capital accounts are fluctuating.

Opening balance of capital.
Additional capital introduced during an accounting year.
Salaries to the partners.
Interest on capital.
Share of profit.
Commission and bonus to the partners.

The following items are debited in the Partner's Capital Account when capital accounts are fluctuating.

Drawings made during the accounting period.
Interest on drawings.
Share of loss.
Closing balance of capital.

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Question 224 Marks

A, B and Care partners sharing profits and losses in the ratio of 1 : 2 : 3. They have omitted interest on capital @ 8% p.a. for two years ended 31st March, 2016. Their fixed capitals were ₹ 4,00,000,₹ 6,00,000 and ₹ 8,00,000 respectively. Pass the necessary adjusting entry.

Answer

			₹
A	8% on ₹ 4,00,000 for 2 years	=	64,000
B	8% on ₹ 6,00,000 for 2 years	=	96,000
C	8% on ₹ 8,00,000 for 2 years	=	1,28,000
			$\overline{\underline{2,88,000}}$

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Question 234 Marks

A, B and C were. partners in a firm. Their capitals were A ₹ 1,00,000, B ₹ 2,00,000 and C ₹ 3,00,000 respectively on 1st April, 2017 According to the partnership deed they were entitled to an interest on capital @ 5% p.a. In addition A was also entitled to draw a salary off ₹ 5,000 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 A. The net profits for the year ending 31st March, 2018 were ₹ 3,60,000 distributed in the ratio of their capitals without providing for any of the above. adjustments. The profits were to be shared in the ratio 2 : 3 : 5. Pass the necessary adjustment entry showing the workings clearly.

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Question 244 Marks

A, B and C are partners in a firm. Net profit of the firm for the year ended 31st march, 2018 is ₹ 30,000, which has been duly distributed among the partners, in their agreed ratio of 3 : 1 : 1 respectively. It is discovered on 10th April, 2018 that the undermentioned transactions were not passed through the books of account of the firm for the year ended 31st March, 2018.

Interest on Capital @ 6% per annum, the capital of A, B and C being ₹ 50,000; ₹ 40,000 and ₹ 30,000 respectively.
Interest on drawings: A ₹ 350; B ₹ 250; C ₹ 150.
Partners' Salaries: A ₹ 5,000; B ₹ 7,500.
Commission due to A (for some special transaction) ₹ 3,000.

You are required to pass a Journal entry, which will not affect Profit and Loss Account of the firm and rectify the position of partners inter se.

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Question 254 Marks

Roshan, Mahesh, Gopi and Jai are partners sharing profits and losses in the ratio of 3 : 3 : 2 : 2.
The balances of capital accounts on 1st April, 2015 were Roshan ₹ 8,00,000 Mahesh ₹ 5, 00 ,000, Gopi ₹ 6,00,000 and Jai ₹ 6,00,000.
After the accounts for the year ended 31st March, 2016 were prepared, it was discovered that interest on capital @ 10% per annum as provided in the partnership deed had not been credited to the partners' capital accounts before the distribution of profit.
You are required. to rectify the error by passing a single adjusting journal entry.

Answer

MISSING

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Question 264 Marks

A and B are partners in a firm sharing profits and losses in the ratio of 2 : 1. The following was the Balance Sheet of the firm as at 31.3.2016.

The profits ₹ 4,50,000 for the year ended 31.3.2016 were divided betweenthe partners without allowing interest on capital @ 9% p.a. and without charging interest on drawings @ 12% p.a. During the year 4 withdrew ₹ 1,00,000 and B ₹ 50,000.
Pass the necessary adjustment journal entry and show your working clearly.

Answer

Interest on capital should always be calculated on the opening capitals. CALCULATION OF OPENING CAPITALS:

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Question 274 Marks

Arun, Boby and Chintu are partners in a firm sharing profit in the ratio or 2 : 2 : 1. According to the terms of the partnership agreement, Chintu has to get a minimum of ₹ 60,000, irrespective of the profits of the firm. Any Deficiency to Chintu on Account of such guarantee shall be borne by Arun. Prepare the profit and loss appropriation account showing distribution of profits among partners in case the profits for year 2015 are: (i) ₹ 2,50,000; (ii) 3,60,000.

Answer

Case I:

Case II:

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Question 284 Marks

Simrni and Sonu are partners in a firm, sharing profits and losses in the ratio of 3 : 1. The profit and loss account of the firm for the year ending March 31st, 2016 shows a net profit of ₹ 1,50,000. Prepare the Profit and Loss Appropriation Account by taking into consideration the following information:

Partners capital on April 1st, 2015:

Simmi ₹ 30,000; Sonu ₹ 60,000.

Current accounts balances on April 1, 2015:

Simmi ₹ 30,000 (Cr.); Sonu ₹ 15,000 (Cr.).

Partners drawings-during the year amounted to:

Simmi ₹ 20,000; Sonu ₹ 15,000.

Interest on capital was allowed @ 5% p.a.
Interest on drawing was to be charged @ 6% p.a, at an average of six months.
Partner's salaries: Simmi ₹ 12,000 and Sonu ₹ 9,000. Also show the partner's current accounts.

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Question 294 Marks

On 1st April, 2016 A and B commenced business with Capitals of ₹ 60,000 and ₹ 20,000 respectively. On 31st March, 2017 the trading profit (before taking into account the provisions of deed) was ₹ 24,000. Interest on capitals is to be allowed at 6% p.a. B was entitled to a salary of ₹ 6,000 p.a. The drawings of the partners A and B were 6,000 and 4,000 respectively. The interest on Drawings for A being ₹ 200 and B ₹ 100. Assuming that A and B are equal partners, prepare the Profit & Loss Appropriation A/c and Partner’s Capital Accounts as at 31st March, 2017.

Answer

Note: Capitals will be treated fluctuating in the absence of information.

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Question 304 Marks

A, B and C are partners with capitals of ₹ 8,00,000, ₹ 6,00,000 and ₹ 5,00,000 respectively. After providing interest on capital at 8% p.a. they divide profits in the ratio of $\frac{1}{2}:\frac{1}{3}:\frac{1}{6}$ A and B have guaranteed that C's share shall not be less than ₹ 1,00,000.
During the year A and B have each withdrawn ₹ 2,00,000 andC ₹ 1,00,000. The net profit for the year, before providing interest on partner's capitals was ₹ 5,12,000. You are required to show the Current Accounts of the partners.

Answer

MISSING

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Question 314 Marks

Tulsi and Kabir are partners sharing profits in proportion of 3 : 2 with. capitals of ₹ 8,00,000 and ₹ 6,00,000 respectively. Interest on capitals is agreed at 6% p.a. Tulsi is to be allowed a salary of ₹ 6,000 per month. For the year ended 31st March, 2018, the profits prior to calculation of interest on capital but after charging Tulsi's salary amounted ₹ 2,28,000; Manager is to be allowed a commission of 10% of the profits.
Prepare an account showing the allocation of profits.

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Question 324 Marks

Write a note on guarantee of profit to a partner.

Answer

Guarantee to a partner refers to the guarantee of certain minimum amount of profit by all the other partners or any one partner of a firm. The difference amount is paid to the guaranteed partner, if and only if his/ her share in the profit is lesser than the assured amount (or the minimum amount guaranteed).
There are usually two cases:
Case 1: If a partner is guaranteed by all the other partners for minimum profit,
Step I: Calculate the profit earned by the firm.

Step II: Calculate the share of profit of the guaranteed partner.

Step III: Deficiency, if any, will be borne by all the other partners either in their profit ratio or in any other agreed ratio.
Case 2: If a partner is guaranteed by any other partner for minimum profit,

Step I: Calculate the profit earned by the firm.

Step II: Calculate the share of profit of all the partners.

Step III: Calculate the deficiency of the guaranteed partner.

Step IV: Deduct the amount of deficiency from the profit of the guarantor partner and add the deficiency amount to the guaranteed partner's profit.

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Question 334 Marks

A, B and C were partners in a firm having capitals of ₹ 1,00,000; ₹ 1,00,000 and ₹ 2,00,000 respectively. According to the partnership deed the partners were entitled to interest on capital @ 6% p.a. A being the working partner was also entitled o a salary profits ₹ 5,000 per month. The profits wereto be divided as follows:

The first ₹ 40,000 in the ratio of 2 : 3 : 5.
Next ₹ 80,000 in the proportion of their capitals.
Remaining profits to be shared equally.

The firm made a profit of ₹ 2,70,000 fot the year ended 31st March 2018 before charging any of the above items. Prepare the Profit & Loss Appropriation Account and pass necessary journal entry for apportionment of profits.

Answer

Working Note:
Profit after Interest on capital and Salary:
₹ 2,70,000 – ₹ 24,000 – ₹ 60,000 = ₹ 1,86,000

	A(₹)	B(₹)	C(₹)
First ₹ 40,000 in Capital Ratio i.e. 2 : 3 : 5	8,000	12,000	20,000
Next ₹ 80,000 in Capital Ratio i.e. 1 : 1 : 2	20,000	20,000	40,000
Remaining ₹ 66,000 equally	22,000	22,000	22,000
	50,000	54,000	82,000

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Question 344 Marks

On 1st April 2015 X, Y and Z started a business in partenership X contributes ₹ 90,000 at first but withdraws ₹ 30,000 at the end of six month introduces ₹ 75,000 at first and increases it to ₹ 90,000 at the end of four months, but withdraws f30,000 at the end of eight months. Z brings in ₹ 75,000 at first but ncreases it by ₹ 60,000 at the end of seven months.
During the year ended 31st March, 2016, theymake anet profit of ₹ 42,000. Show how the partners should divide this amount on the basis of effective capital employed by each partner.

Answer

Ratio of effective capital will be calculated as under:—

		Products
X	₹ 90,000 for 6 months	5,40,000
	₹ 60,000 for 6 months	3,60,000
		$\underline{9,00,000}$
Y	₹ 75,000 for 4 months	3,00,000
	₹ 90,000 for 4 months	3,60,000
	₹ 60,000 for 4 months	2,40,000
		$\underline{9,00,000}$
Z	₹ 75,000 for 7 months	5,25,000
	₹ 1,35,000 for 5 months	6,75,000
		$\underline{12,00,000}$

Thus the profit sharing ratio would be: 9,00.000 : 9,00.000 : 12.00,000 or 3 : 3 : 4

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Question 354 Marks

Pooja and Archria are partners in a sharing profits and losses in the ration of 2 : 1. Their capital accounts as on 1st April, 2017 stand at 70,000 and 30,000. The partners are allowed interest on capital @ 10% p.a. The drawings of the partners during the year ended 31st March, 2018. Interest ischarged on drawings at the rate of 10% p.a.
Pooja has given a loan to firm as on 1st November, 2017 of 20,000.
The profit of the firm for the year ended 31st March, 2018 before above adjustments was 80,000. 10% of this profit is to be kept in a Reserve Account.

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Question 364 Marks

X, Y and Z contribute ₹ 3,00,000,₹ 2,00,000 and ₹ 1,00,000 respectively by way of capital on which they agree to allow interest at 12% p.a. They share profits and losses in the ratio of 5 : 3 : 2. Profit for the year ended 31st March, 2016 is ₹ 60,000 before allowing interest on capitals. Prepare a Profit & Loss Appropriation Account if:

Partnership deed is silent as to the treatment of interest as a charge or appropriation.
Partnership deed provides for interest even if it involves the firm in loss.

Answer

Note: The available profit is ₹ 60,000 whereas the interest due on capitals is ₹ 72,000 (i.e., ₹ 36,000 + ₹ 24,000 + ₹ 12,000). Since the profit is less than the interest, the available profit will be distributed in the ratio of interest i.e. 36,000 : 24,000 : 12,000 or 3 : 2 : 1.

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Question 374 Marks

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:

Interest on Capital @ 6% p.a.
Interest on Drawings @ 6% p.a.
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.

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Question 384 Marks

X, Y and Z are in the partnership and on 1st April 2015 their respective capitals were ₹ 2,00,000; ₹ 1,20,000 and ₹ 1,00,000. Y is entitled to a salary of ₹ 25,000 and Z ₹ 20,000 per annum, payable before division of profits. Interest is allowed on capital at 5% per annum but is not charged on drawings. Of the net divisible profits of the first ₹ 1,00,000; Xis entitled to 40 percent; Y to 35 per cent and Z to 25 percent, over that amount profits are shared equally. The profit for the year ended 31st March, 2016, after debiting partnership salaries, but before charging interest on capitals, was ₹ 1,81,000 and the partners had drawn ₹ 8,000 each. Prepare partner's capital accounts for the year.

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Question 394 Marks

Piya and Bina are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following was the Balance Sheet of the firm as on 31st March, 2016:

The profits ₹ 30,000 for the year ended 31st March, 2016 were divided between the partners without allowing interest on capital @ 12% p.a. salary to Piya @ ₹ 1,000 per month. During the year Piya withdrew ₹ 8,000 and Bina withdrew ₹ 4,000. Showing your working notes clearly, pass the necessary rectifying entry.

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Question 404 Marks

A and B are partners in a firm sharing profits or losses in the ratio of 2 : 3 with capitals of ₹ 4,00,000 and ₹ 8,00,000 respectively on 1st April, 2016. Each partner is entitled to 10% p.a. interest on his capital. B is entitled a commission of 10% on net profit remaining after deducting interest on capital but before charging any commission. A is entitled a commission of 8% of net profit remaining after deducting interest on capital and after charging all commissions. The profit for the year ended 31st March, 2017 prior to calculation of interest on capital was ₹ 6,00,000.
Prepare Profit and Loss Appropriation Account.

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Question 414 Marks

A, B and C are partners sharing profits in the ratio of 2 : 2 : 1. Their fixed capitals were ₹ 4,00,000, ₹ 2,50,000 and ₹ 1,00,000 respectively. Net profit for the year ending 31st March, 2017 amounted to ₹ 2,20,000 which was distributed without providing for the following:

Salary to B ₹ 5,000 p.m. and to C ₹ 10,000 per quarter.
Interest on capital @ 6% p.a.
Commission to Manager @ 10% after charging such commission.

Pass necessary rectifying entry.

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Question 424 Marks

Fill in the missing figures in the following Accounts:

Answer

Working Notes:
rs share of Profit is $\frac{2}{5}$ and his share is ₹ 10,000
Hence, total Profit $=10,000\times\frac{5}{2}=₹\ 25,000$
X's share $=25,000\times\frac{3}{5}=₹\ 15,000$
Salary to Y is the balancing figure of Profit & Loss Appropriation A/c.
Interest on X's Capital @ 8% is ₹ 12,000
Hence, X's Capital $=12,000\times\frac{100}{8}=₹\ 1,50,000$
Interest on Y's Capital @ 8% p.a. is ₹ 8,000
Hence,Y's Capital $=8,000\times\frac{100}{8}=₹\ 1,00,000$

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Question 434 Marks

A, B and C were in Partnership sharing profits four seventh, two-seventh and one-seventh respectively. It being provided that in no year C's share be less than ₹ 1,80,000.
The Profit for the year ending 31st March, 2016 amounted to ₹ 10,50,000. You are required to show the appropriation of profit between the partners.

Answer

MISSING

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Question 444 Marks

A, B and c were partners sharing profits and losses in the ratio of 3 : 2 : 1. Their capitals on 1st April, 2017 were:
A ₹ 5,00,000; B ₹ 3,00,000 and C ₹ 2,00,000.
4 had personally guaranteed that in. any Year C share of profit after allowing interest on capital to all partners @ 8% p.a. and charging interest on drawings @ 10% p.a. will not be less than ₹ 1,00,000.
The net profit for the year ended 31st March, 2018, before allowing or charging any interest amounted to ₹ 4,32,000.
A has withdrawn ₹ 5,000 at the end of every month.
B has withdrawn ₹ 15,000 at the end of every quarter.
C has withdrawn ₹ 60,000 during the year.
Prepare Profit and Loss Appropriation Account for the year 2017-18.

Answer

MISSING

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Question 454 Marks

Rani and Suman are in partnership with capitals of ₹ 80,000 and ₹ 60,000, respectively. During the year 2015-2016, Rani withdrew ₹ 10,000 from her capital and Suman ₹ 15,000. Profits before charging interest on capital was ₹ 50,000. Ravi and Suman shared profits in the ratio of 3 : 2. Calculate the amounts of interest on their capitals @ 12% p.a. for the year ended March 31, 2016.

Answer

Interest on Capital
$\text{Rani}\Rightarrow60000\times\frac{12}{100}=7200$
$\text{Suman}\Rightarrow55000\times\frac{12}{100}=6600$

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Question 464 Marks

X, Y and Z are partners sharing profits and of 16 : 12 losses in the ratio with a minimum profit off 10,000 for Z. The profits for the year ended 31st, March 2018 amounted to ₹ 39,500 Pass necessary journal entries in the books of the firm.

Answer

Working Note:
Distribution of Profit:
$\text{X}=39,500\times\frac{16}{35}= ₹\ 18,057$
$\text{Y}=39,500\times\frac{12}{35}= ₹\ 13,543$
$\text{Z}=39,500\times\frac{7}{35}= ₹\ 7,900$
Z’s share in profits amounts to ₹ 7,900 where as the minimum guaranteed amount is ₹ 10,000. Hence, the deficiency will be borne by X and Y in the ratio of 16 : 12.
X’s share $= 2,100\times\frac{16}{28} = ₹\ 1,200$
Y’s share $= 2,100\times\frac{12}{28} = ₹\ 900$

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Question 474 Marks

Ashok, Brijesh and Cheena are partners sharing profits and losses in the ratio of 2 : 2 : 1. Ashok and Brijesh have guaranteed that Cheena share in any year shall be less than ₹ 20,000. The net profit for the year ended March 31, 2017 amounted to ₹ 70,000. Prepare Profit and Loss Appropriation Account.

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Question 484 Marks

A, B and C entered into partnership on 1st April 2016 with capitals of ₹ 10,00,000, ₹ 8,00,000 and ₹ 5,00,000 respectively. On 1st July 2016, B advanced 2,00,000 and 1st December 2016 C advanced ₹ 1,00,000 by way of loans to the firm. The profit and loss Account for the year ended 31.3.2017 disclosed a profit of ₹ 7,70,000 but thr partness could not agree upon the interest on loans and the profid sharing ratio. Prepare partner's Capital A/cs and Loan A/cs.Hint: In the absence of agreement, interst on loan is to be paid @6% and profit will be shared equally.

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Question 494 Marks

On 1st April, 2015 the Capitals of A and B were ₹ 4,00,000 and ₹ 2,00,000 respectively. They divided profits in their capital ratio. Profits for the year ended 31st March, 2016 were ₹ 3,00,000. which have heen duly distributed among the partners, but the following transactions were not passed through the books:-

Interest on Capitals @ 12% p.a.
Interest on Drawings A ₹ 12,000, B ₹ 10,000.
eommission due to ₹ 20,000 on a special transaction.
A is to be paid a salary of ₹ 50,000.

You are required to pass a journal entry on 10th April, 2016 Which will not affect the P & L A/c of the firm and at the same time will rectify the errors.

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Question 504 Marks

A and B are partners with capitals of ₹ 5,00,000 and ₹ 3,00,000 respectively sharing profits in the ratio of 2 : 1. The terms of partnership are as follows:

Interest on Capital is to be allowed @ 9% p.a.
A is to get a salary of ₹ 4,000 per month.
Interest on B's Loan account of ₹ 2,00,000 for the whole year.
Interest on drawings of partners at 12% per annum. Drawings being A ₹ 60,000 and 72,000.
5% of the distributable profit should be transferred to General Reserve.

Fill in the missing figures in the following accounts:

Answer

Profit before interest ₹ 3,04,080.
Profit & Loss Appropriation A/c will be completed First. Based on A's share of profit, profit transferred to Capital Accounts will be ₹ 1,71,000.
Profit before transfer to General Reserve:
$1,71,000\times\frac{100}{95}=₹\ 1,80,000$
Interest on Drawings will be calculated for six months.
Figure of net profit ₹ 2,92,080 will be the balancing figure of P & L Appropriation A/c. It will be transferred to the Dr. side of P & L A/c.
Interest on B's Loan will be calculated @ 6% p.a.
Profit before interest will be ₹ 3,04,080.

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