NCERT Solutions for Class 12 Accountancy Partnership Accounts Chapter 1

Accounting for Partnership : Basic Concepts Class 12

Chapter 1 Accounting for Partnership : Basic Concepts Exercise Solutions

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Short answers : Solutions of Questions on Page Number : 100

Q1 :  

Define Partnership Deed.


Answer :

Partnership Deed is a written agreement among the partners of a partnership firm. It includes agreement on profit sharing ratio, salaries, commission of partners, interest provided on partner's capital and drawings and interest on loan given or taken by the partners, etc. Generally following details are included in a partnership deed.

1. Objective of business of the firm

2. Name and address of the firm

3. Name and address of all partners

4. Profit and loss sharing ratio

5. Contribution to capital by each partner

6. Rights, types of roles and duties of partners

7. Duration of partnership

8. Rate of interest on capital, drawings and loans

9. Salaries, commission, if payable to partners.

10. Rules regarding admission, retirement, death and dissolution of the firm, etc.

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Q2 :  

Why is it desirable to make the partnership agreement in writing.

Explain in 50 words.


Answer :

Partnership agreement may be oral or written. It is not compulsory to form partnership agreement in writing under the Partnership Act, 1932. However, written partnership deed is desirable than oral agreement as it helps in avoiding disputes and misunderstandings among the partners. Also, it helps in settling disputes (as the case may be) among the partners, as written partnership deed can be referred to anytime. If written partnership deed is duly signed and registered under Partnership Act, then it can be used as evidence in the court of law.

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Q3 :  

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

(i) Capitals are fixed

(ii) Capitals are fluctuating


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Q4 :  

Why is Profit and Loss Adjustment Account prepared? Explain.


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Q5 :  

Give two circumstances under which the fixed capitals of partners may change.


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Q6 :  

If a fixed amount is withdrawn on the first day of every quarter, for what period

the interest on total amount withdrawn will be calculated?


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<< Previous Chapter 6 : Cash Flow Statement Next Chapter 2 : Reconstitution of a Partnership Firm - Admission of a Partner >>

Short answersnumerical questionslong answers : Solutions of Questions on Page Number : 101

Q1 :  

Triphati and Chauhan are partners in a firm sharing profits and losses in the ratio of 3:2. Their capitals were Rs 60,000 and Rs 40,000 as on January 01, 2005. During the year they earned a profit of Rs 30,000. According to the partnership deed both the partners are entitled to Rs 1,000 per month as Salary and 5% interest on their capital. They are also to be charged an interest of 5% on their drawings, irrespective of the period, which is Rs 12,000 for Tripathi, Rs 8,000 for Chauhan. Prepare Partner's Accounts when, capitals are fixed.


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Q2 :  

What is partnership? What are its chief characteristics? Explain.


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Q3 :  

Anubha and Kajal are partners of a firm sharing profits and losses in the ratio of 2:1. Their capital, were Rs 90,000 and Rs 60,000. The profit during the year were Rs 45,000. According to partnership deed, both partners are allowed salary, Rs 700 per month to Anubha and Rs 500 per month to Kajal. Interest allowed on capital @ 5% p.a. The drawings at the end of the period were Rs 8,500 for Anubha and Rs 6,500 for Kajal. Interest is to be charged @ 5% p.a. on drawings. Prepare partners capital accounts, assuming that the capital account are fluctuating.


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Q4 :  

Discuss the main provisions of the Indian Partnership Act, 1932 that are relevant to partnership accounts if there is no partnership deed.


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Q5 :  

Explain why it is considered better to make a partnership agreement in writing.


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Q6 :  

Illustrate how interest on drawings will be calculated under various situations.


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Q7 :  

Write a note on guarantee of profit to a partner.


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Q8 :  

How will you deal with a change in the profit sharing ratio among existing partners?

Take imaginary figures to illustrate your answer?


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Q9 :  

In the absence of partnership deed, specify the rules relating to the following:

(i) Sharing of profits and losses.

(ii) Interest on partner's capital.

(iii) Interest on Partner's drawings.

(iv) Interest on Partner's loan

(v) Salary to a partner.


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<< Previous Chapter 6 : Cash Flow Statement Next Chapter 2 : Reconstitution of a Partnership Firm - Admission of a Partner >>

Numerical questions : Solutions of Questions on Page Number : 102

Q1 :  

Harshad and Dhiman are in partnership since April 01, 2006. No Partnership agreement was made. They contributed Rs 4,00,000 and 1,00,000 respectively as capital. In addition, Harshad advanced an amount of Rs 1,00,000 to the firm, on October 01, 2006. Due to long illness, Harshad could not participate in business activities from August 1, to September 30, 2006. The profits for the year ended March 31, 2006 amounted to Rs 1,80,000. Dispute has arisen between Harshad and Dhiman.

 

Harshad Claims:

(i)    He should be given interest @ 10% per annum on capital and loan;

(ii)   Profit should be distributed in proportion of capital;

 

Dhiman Claims:

(i)    Profits should be distributed equally;

(ii)   He should be allowed Rs 2,000 p.m. as remuneration for the period he managed the business, in the absence of Harshad;

(iii)  Interest on Capital and loan should be allowed @ 6% p.a.

 

You are required to settle the dispute between Harshad and Dhiman. Also prepare Profit and Loss Appropriation Account.

 


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Q2 :  

Aakriti and Bindu entered into partnership for making garment on April 01, 2006 without any Partnership agreement. They introduced Capitals of Rs 5,00,000 and Rs 3,00,000 respectively on October 01, 2006. Aakriti Advanced. Rs 20,000 by way of loan to the firm without any agreement as to interest. Profit and Loss account for the year ended March 2007 showed profit of Rs 43,000. Partners could not agree upon the question of interest and the basis of division of profit. You are required to divide the profits between them giving reason for your solution.


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Q3 :  

Rakhi and Shikha are partners in a firm, with capitals of Rs 2,00,000 and Rs 3,00,000 respectively. The profit of the firm, for the year ended 2006-07 is Rs 23,200. As per the Partnership agreement, they share the profit in their capital ratio, after allowing a salary of Rs 5,000 per month to Shikha and interest on Partner's capital at the rate of 10% p.a. During the year Rakhi withdrew Rs 7,000 and Shikha Rs 10,000 for their personal use. You are required to prepare Profit and Loss Appropriation Account and Partner's Capital Accounts.


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Q4 :  

Lokesh and Azad are partners sharing profits in the ratio 3:2, with capitals of Rs 50,000 and Rs 30,000, respectively. Interest on capital is agreed to be paid @ 6% p.a. Azad is allowed a salary of Rs 2,500 p.a. During 2006, the profits prior to the calculation of interest on capital but after charging Azad's salary amounted to Rs 12,500. A provision of 5% of profits is to be made in respect of manager's commission. Prepare accounts showing the allocation of profits and partner's capital accounts.


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Q5 :  

The partnership agreement between Maneesh and Girish provides that:

 

(i)    Profits will be shared equally;

(ii)   Maneesh will be allowed a salary of Rs 400 p.m;

(iii)  Girish who manages the sales department will be allowed a commission equal to 10% of the net profits, after allowing Maneesh’s salary;

(iv)  7% interest will be allowed on partner’s fixed capital;

(v)   5% interest will be charged on partner’s annual drawings;

(vi)  The fixed capitals of Maneesh and Girish are Rs 1,00,000 and Rs 80,000, respectively. Their annual drawings were Rs 16,000 and 14,000, respectively. The net profit for the year ending March 31, 2006 amounted to Rs 40,000;

 

Prepare firm’s Profit and Loss Appropriation Account.

 


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Q6 :  

Ram, Raj and George are partners sharing profits in the ratio 5 : 3 : 2. According to the partnership agreement George is to get a minimum amount of Rs 10,000 as his share of profits every year. The net profit for the year 2006 amounted to Rs 40,000. Prepare the Profit and Loss Appropriation Account.


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Q7 :  

Amann, Babita and Suresh are partners in a firm. Their profit sharing ratio is 2:2:1. Suresh is guaranteed a minimum amount of Rs 10,000 as share of profit, every year. Any deficiency on that account shall be met by Babita. The profits for two years ending December 31, 2005 and December 31, 2006 were Rs 40,000 and Rs 60,000, respectively. Prepare the Profit and Loss Appropriation Account for the two years.


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Q8 :  

Simmi 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 31, 2006 shows a net profit of Rs 1,50,000. Prepare the Profit and Loss Appropriation Account by taking into consideration the following information:

 

(i)    Partners capital on April 1, 2005;

        Simmi, Rs 30,000; Sonu, Rs 60,000;

(ii)   Current accounts balances on April 1, 2005;

        Simmi, Rs 30,000 (cr.); Sonu, Rs 15,000 (cr.);

(iii)  Partners drawings during the year amounted to

        Simmi, Rs 20,000; Sonu, Rs 15,000;

(iv)  Interest on capital was allowed @ 5% p.a.;

(v)   Interest on drawing was to be charged @ 6% p.a. at an average of six months;

(vi)  Partners’ salaries : Simmi Rs 12,000 and Sonu Rs 9,000. Also show the partners’ current accounts.

 

 


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Q9 :  

Ramesh and Suresh were partners in a firm sharing profits in the ratio of their capitals contributed on commencement of business which were Rs 80,000 and Rs 60,000 respectively. The firm started business on April 1, 2005. According to the partnership agreement, interest on capital and drawings are 12% and 10% p.a., respectively. Ramesh and Suresh are to get a monthly salary of Rs 2,000 and Rs 3,000, respectively. The profits for year ended March 31, 2006 before making above appropriations was Rs 1,00,300. The drawings of Ramesh and Suresh were Rs 40,000 and Rs 50,000, respectively. Interest on drawings amounted to Rs 2,000 for Ramesh and Rs 2,500 for Suresh. Prepare Profit and Loss Appropriation Account and partners' capital accounts, assuming that their capitals are fluctuating.


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Q10 :  

Sukesh and Vanita were partners in a firm. Their partnership agreement provides that:

 

(i)    Profits would be shared by Sukesh and Vanita in the ratio of 3:2;

(ii)   5% interest is to be allowed on capital;

(iii)  Vanita should be paid a monthly salary of Rs 600.

 

The following balances are extracted from the books of the firm, on December 31, 2006.

 

 

Sukesh

Verma

 

Rs

Rs

Capital Accounts

40,000

40,000

Current Accounts

(Cr.)   7,200

(Cr.)   2,800

Drawings

10,850

8,150

 

Net profit for the year, before charging interest on capital and after charging partner’s salary was Rs 9,500. Prepare the Profit and Loss Appropriation Account and the Partner’s Current Accounts.

 

 


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Q11 :  

Rahul, Rohit and Karan started partnership business on April 1, 2006 with capitals of Rs 20,00,000, Rs 18,00,000 and Rs 16,00,000, respectively. The profit for the year ended March 2007 amounted to Rs1,35,000 and the partner's drawings had been Rahul Rs 50,000, Rohit Rs 50,000 and Karan Rs 40,000. The profits are distributed among partner's in the ratio of 3:2:1. Calculate the interest on capital @ 5% p.a.


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Q12 :  

Sunflower and Pink Rose started partnership business on April 01, 2006 with capitals of Rs 2,50,000 and Rs 1,50,000, respectively. On October 01, 2006, they decided that their capitals should be Rs 2,00,000 each. The necessary adjustments in the capitals are made by introducing or withdrawing cash. Interest on capital is to be allowed @ 10% p.a. Calculate interest on capital as on March 31, 2007.


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Q13 :  

On March 31, 2006 after the close of accounts, the capitals of Mountain, Hill and Rock stood in the books of the firm at Rs 4,00,000, Rs3,00,000 and Rs 2,00,000, respectively. Subsequently, it was discovered that the interest on capital @ 10% p.a. had been omitted. The profit for the year amounted to Rs 1,50,000 and the partner's drawings had been Mountain: Rs 20,000, Hill Rs 15,000 and Rock Rs 10,000. Calculate interest on capital.


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Q14 :  


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Q15 :  

 

Following is the extract of the Balance Sheet of, Neelkant and Mahdev as on March 31, 2007:

 

Balance Sheet as at March 31, 2007

 

 

Amount

 

Amount

Liabilities

Rs

Assets

Rs

Neelkant’s Capital

10,00,000

Sundry Assets

30,00,000

Mahadev’s Capital

10,00,000

 

 

Neelkant’s Current Account

1,00,000

 

 

Mahadev’s Current Account

1,00,000

 

 

Profit and Loss Apprpriation

 

 

 

(March 2007)

8,00,000

 

 

 

30,00,000

 

30,00,000

 

 

 

 

 

During the year Mahadev’s drawings were Rs 30,000. Profits during 2007 is Rs 10,00,000. Calculate interest on capital @ 5% p.a for the year ending March 31, 2007.

 


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Q16 :  

The capital accounts of Moli and Golu showed balances of Rs 40,000 and Rs 20,000 as on April 01, 2006. They shared profits in the ratio of 3:2. They allowed interest on capital @ 10% p.a. and interest on drawings, @ 12 p.a. Golu advanced a loan of Rs 10,000 to the firm on August 01, 2006. During the year, Moli withdrew Rs 1,000 per month at the beginning of every month whereas Golu withdrew Rs 1,000 per month at the end of every month. Profit for the year, before the above mentioned adjustments was Rs 20,950. Calculate interest on drawings show distribution of profits and prepare partner's capital accounts.


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Q17 :  

Rakesh and Roshan are partners, sharing profits in the ratio of 3:2 with capitals of Rs 40,000 and Rs 30,000, respectively. They withdrew from the firm the following amounts, for their personal use:

 

Rakesh

Month

Rs

 

May 31, 2006

600

 

June 30, 2006

 500

 

August 31, 2006

1,000

 

November 1, 2006

400

 

December 31, 2006

1,500

 

January 31, 2007

 300

 

March 01, 2007

 700

Rohan

At the beginning of each month

 400

 

Interest is to be charged @ 6% p.a. Calculate interest on drawings, assuming that book of accounts are closed on March 31, 2007, every year.

 


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Q18 :  

Himanshu withdrews Rs 2,500 at the end Month of each month. The Partnership deed provides for charging the interest on drawings @ 12% p.a. Calculate interest on Himanshu's drawings for the year ending 31st December, 2006.


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Q19 :  

Bharam is a partner in a firm. He withdraws Rs 3,000 at the starting of each month for 12 months. The books of the firm closes on March 31 every year. Calculate interest on drawings if the rate of interest is 10% p.a.


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Q20 :  

Raj and Neeraj are partners in a firm. Their capitals as on April 01, 2005 were Rs 2,50,000 and Rs 1,50,000, respectively. They share profits equally. On July 01, 2005, they decided that their capitals should be Rs 1,00,000 each. The necessary adjustment in the capitals were made by introducing or withdrawing cash by the partners'. Interest on capital is allowed @ 8% p.a. Compute interest on capital for both the partners for the year ending on March 31, 2006.


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Q21 :  

Amit and Bhola are partners in a firm. They share profits in the ratio of 3:2. As per their partnership agreement, interest on drawings is to be charged @ 10% p.a. Their drawings during 2006 were Rs 24,000 and Rs 16,000, respectively. Calculate interest on drawings based on the assumption that the amounts were withdrawn evenly, throughout the year.


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Q22 :  

Harish is a partner in a firm. He withdrew the following amounts during the year 2006 :

 

 

Rs

February 01

4,000

May 01

10,000

June 30

4,000

October 31

12,000

December 31

 4,000

 

Interest on drawings is to be charged @ 7.5 % p.a.

Calculate the amount of interest to be charged on Harish’s drawings for the year ending December 31, 2006.

 


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Q23 :  

Menon and Thomas are partners in a firm. They share profits equally. Their monthly drawings are Rs 2,000 each. Interest on drawings is to be charged @ 10% p.a. Calculate interest on Menon's drawings for the year 2006, assuming that money is withdrawn: (i) in the beginning of every month, (ii) in the middle of every month, and (iii) at the end of every month.


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Q24 :  

On March 31, 2003, after the close of books of accounts, the capital accounts of Ram, Shyam and Mohan showed balance of Rs 24,000 Rs 18,000 and Rs 12,000, respectively. It was later discovered that interest on capital @ 5% had been omitted. The profit for the year ended March 31, 2003, amounted to Rs 36,000 and the partner's drawings had been Ram, Rs 3,600; Shyam, Rs 4,500 and Mohan, Rs 2,700. The profit sharing ratio of Ram, Shyam and Mohan was 3:2:1. Calculate interest on capital.


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Q25 :  

Amit, Sumit and Samiksha are in partnership sharing profits in the ratio of 3:2:1. Samiksha' share in profit has been guaranteed by Amit and Sumit to be a minimum sum of Rs 8,000. Profits for the year ended March 31, 2006 was Rs 36,000. Divide profit among the partners.


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Q26 :  

Pinki, Deepati and Kaku are partner's sharing profits in the ratio of 5:4:1. Kaku is given a guarantee that his share of profits in any given year would not be less than Rs 5,000. Deficiency, if any, would be borne by Pinki and Deepti equally. Profits for the year amounted to Rs 40,000. Record necessary journal entries in the books of the firm showing the distribution of profit.


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Q27 :  

Abhay, Siddharth and Kusum are partners in a firm, sharing profits in the ratio of 5:3:2. Kusum is guaranteed a minimum amount of Rs 10,000 as per share in the profits. Any deficiency arising on that account shall be met by Siddharth. Profits for the years ending March 31, 2006 and 2007 are Rs 40,000 and 60,000 respectively. Prepare Profit and Loss Appropriation Account.


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Q28 :  

Radha, Mary and Fatima are partners sharing profits in the ratio of 5:4:1. Fatima is given a guarantee that her share of profit, in any year will not be less than Rs 5,000. The profits for the year ending March 31, 2006 amounts to Rs 35,000. Shortfall if any, in the profits guaranteed to Fatima is to be borne by Radha and Mary in the ratio of 3:2. Record necessary journal entry to show distribution of profit among partner.


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Q29 :  

X, Y and Z are in Partnership, sharing profits and losses in the ratio of 3 : 2 : 1, respectively. Z's share in the profit is guaranteed by X and Y to be a minimum of Rs 8,000. The net profit for the year ended March 31, 2006 was Rs 30,000. Prepare Profit and Loss Appropriation Account, indicating the amount finally due to each partner.


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Q30 :  

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 Rs 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 2006 are: (i) Rs 2,50,000; (ii) 3,60,000.


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Q31 :  

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 Rs 20,000. The net profit for the year ended March 31, 2006 amounted to Rs 70,000. Prepare Profit and Loss Appropriation Account.


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Q32 :  

Ram, Mohan and Sohan are partners with capitals of Rs 5,00,000, Rs 2,50,000 and 2,00,000 respectively. After providing interest on capital @ 10% p.a. the profits are divisible as follows:

Ram 1/2 , Mohan 1/3 Sohan 1/6 . But Ram and Mohan have guaranteed that Sohan's share in the profit shall not be less than Rs 25,000, in any year. The net profit for the year ended March 31, 2007 is Rs 2,00,000, before charging interest on capital. You are required to show distribution of profit.


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Q33 :  

Amit, Babita and Sona form a partnership firm, sharing profits in the ratio of 3 : 2 : 1, subject to the following :

(i)

Sona's share in the profits, guaranteed to be not less than Rs 15,000 in any year.

(ii)

Babita gives guarantee to the effect that gross fee earned by her for the firm shall be equal to her average gross fee of the proceeding five years, when she was carrying on profession alone (which is Rs 25,000). The net profit for the year ended March 31, 2007 is Rs 75,000. The gross fee earned by Babita for the firm was Rs 16,000.

You are required to show Profit and Loss Appropriation Account (after giving effect to the alone).


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Q34 :  

The net profit of X, Y and Z for the year ended March 31, 2006 was Rs 60,000 and the same was distributed among them in their agreed ratio of 3 : 1 : 1. It was subsequently discovered that the under mentioned transactions were not recorded in the books :

(i)

Interest on Capital @ 5% p.a.

(ii)

Interest on drawings amounting to X Rs 700, Y Rs 500 and Z Rs 300.

(iii)

Partner's Salary : X Rs 1000, Y Rs 1500 p.a.

The capital accounts of partners were fixed as : X Rs 1,00,000, Y Rs 80,000 and Z Rs 60,000. Record the adjustment entry.


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Q35 :  

The firm of Harry, Porter and Ali, who have been sharing profits in the ratio of 2 : 2 : 1, have existed for same years. Ali wants that he should get equal share in the profits with Harry and Porter and he further wishes that the change in the profit sharing ratio should come into effect retrospectively were for the last three year. Harry and Porter have agreement on this account. The profits for the last three years were:

 

 


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Q36 :  

 

Mannu and Shristhi are partners in a firm sharing profit in the ratio of 3:2. Following is the balance sheet of the firm as on March 31, 2006.

 

 

 

Amount

 

 

Amount

Liabilities

Rs

Assets

Rs

Mannu’s Capital

30,000

 

Drawings :

 

 

Shristhi’s Capital

10,000

40,000

Mannu

4,000

 

 

 

 

Shristhi

2,000

6,000

 

 

 

Other Assets

34,000

 

 

40,000

 

 

40,000

 

 

 

 

 

 

 

Profit for the year ended March 31, 2006 was Rs 5,000 which was divided in the agreed ratio, but interest @ 5% p.a. on capital and @ 6% p.a. on drawings was inadvertently enquired. Adjust interest on drawings on an average basis for 6 months. Give the adjustment entry.

 

 


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Q37 :  

On March 31, 2006 the balance in the capital accounts of Eluin, Monu and Ahmed, after making adjustments for profits, drawing, etc; were Rs 80,000, Rs 60,000 and Rs 40,000 respectively. Subsequently, it was discovered that interest on capital and interest on drawings had been omitted. The partners were entitled to interest on capital @ 5% p.a. The drawings during the year were Eluin Rs 20,000; Monu, Rs 15,000 and Ahmed, Rs 9,000. Interest on drawings chargeable to partners were Eluin Rs 500, Monu Rs 360 and Ahmed Rs 200. The net profit during the year amounted to Rs 1,20,000. The profit sharing ratio was 3 : 2 : 1. Pass necessary adjustment entries.


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Q38 :  

Azad and Benny are equal partners. Their capitals are Rs 40,000 and Rs 80,000, respectively. After the accounts for the year have been prepared it is discovered that interest at 5% p.a. as provided in the partnership agreement, has not been credited to the capital accounts before distribution of profits. It is decided to make an adjustment entry at the beginning of the next year. Record the necessary journal entry.


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Q39 :  

Kavita and Pradeep are partners, sharing profits in the ratio of 3 : 2. They employed Chandan as their manager, to whom they paid a salary of Rs 750 p.m. Chandan deposited Rs 20,000 on which interest is payable @ 9% p.a. At the end of 2001 (after the division of profit), it was decided that Chandan should be treated as partner w.e.f. Jan. 1, 1998 with 1/6 th share in profits. His deposit being considered as capital carrying interest @ 6% p.a. like capital of other partners. Firm's profits after allowing interest on capital were as follows:

 

 


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Q40 :  

Mohan, Vijay and Anil are partners, the balance on their capital accounts being Rs 30,000, Rs 25,000 and Rs 20,000 respectively. In arriving at these figures, the profits for the year ended March 31, 2007 amounting to Rupees 24,000 had been credited to partners in the proportion in which they shared profits. During the tear their drawings for Mohan, Vijay and Anil were Rs 5,000, Rs 4,000 and Rs 3,000, respectively. Subsequently, the following omissions were noticed:

(a)

Interest on Capital, at the rate of 10% p.a., was not charged.

(b)

Interest on Drawings: Mohan Rs 250, Vijay Rs 200, Anil Rs 150 was not recorded in the books.

Record necessary corrections through journal entries.


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Q41 :  

Anju, Manju and Mamta are partners whose fixed capitals were Rs 10,000, Rs 8,000 and Rs 6,000, respectively. As per the partnership agreement, there is a provision for allowing interest on capitals @ 5% p.a. but entries for the same have not been made for the last three yeaRs The profit sharing ratio during there years remained as follows:

 

Year

Anju

Manju

Mamta

2004

4

3

5

2005

3

2

1

2006

1

1

1

 

Make necessary and adjustment entry at the beginning of the fourth year i.e. Jan. 2007.

 


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Q42 :  

 

Dinker and Ravinder were partners sharing profits and losses in the ratio of 2:1. The following balances were extracted from the books of account, for the year ended December 31, 2005.

 

Account Name

Debit

Amount

Rs

Credit

Amount

Rs

Capital

 

 

Dinker

 

2,35,000

Ravinder

 

1,63,000

Drawings

 

 

Dinker

 6,000

 

Ravinder

 5,000

 

Opening Stock

35,100

 

Purchases and Sales

2,85,000

3,75,800

Carriage inward

2,200

 

Returns

3,000

2,200

Stationery

1,200

 

Wages

12,500

 

Bills receivables and Bills payables

45,000

32,000

Discount

900

400

Salaries

12,000

 

Rent and Taxes

18,000

 

Insurance premium

2,400

 

Postage

300

 

Sundry expenses

1,100

 

Commission

 

3,200

Debtors and creditors

95,000

40,000

Building

1,20,000

 

Plant and machinery

80,000

 

Investments

1,00,000

 

Furniture and Fixture

26,000

 

Bad Debts

 2,000

 

Bad debts provision

 

 4,600

Loan

 

35,000

Legal Expenses

200

 

Audit fee

1,800

 

Cash in Hand

13,500

 

Cash at Bank

23,000

 

 

8,91,200

8,91,200

 

 

 

 

Prepare final accounts for the year ended December 31,2005, with following adjustment:

 

(a)  Stock on December 31,2005, was Rs 42,500.

(b)  A Provision is to be made for bad debts at 5% on debtors

(c)  Rent outstanding was Rs 1,600.

(d) Wages outstanding were Rs 1,200.

(e)  Interest on capital to be allowed on capital @ 4% per annum and interest on drawings to be charged @ 6% per annum.

(f)  Dinker and Ravinder are entitled to a Salary of Rs 2,000 per annum

(g)  Ravinder is entitled to a commission Rs 1,500.

(h)  Depreciation is to be charged on Building @ 4%, Plant and Machinery, 6%, and furniture and fixture, 5%.

(i)   Outstanding interest on loan amounted to Rs 350.

 


Answer :

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Q43 :  

 

Kajol and Sunny were partners sharing profits and losses in the ratio of 3:2. The following Balances were extracted from the books of account for the year ended March 31, 2006.

 

Account Name

Debit Amount Rs

Credit Amount Rs

Capital

 

 

Kajol

 

1,15,000

Sunny

 

91,000

Current accounts [on 1-04-2005]

 

 

Kajol

 

4,500

Sunny

3,200

 

Drawings

 

 

Kajol

6,000

 

Sunny

3,000

 

Opening stock

22,700

 

Purchases and Sales

1,65,000

2,35,800

Freight inward

1,200

 

Returns

 2,000

3,200

Printing and Stationery

 900

 

Wages

 5,500

 

Bills receivables and Bills payables

25,000

21,000

Discount

 400

 800

Salaries

6,000

 

Rent

7,200

 

Insurance premium

2,000

 

Traveling expenses

700

 

Sundry expenses

 1,100

 

Commission

 

1,600

Debtors and Creditors

74,000

78,000

Building

85,000

 

Plant and Machinery

70,000

 

Motor car

60,000

 

Furniture and Fixtures

15,000

 

Bad debts

1,500

 

Provision for doubtful debts

 

2,200

Loan

 

25,000

Legal expenses

300

 

Audit fee

900

 

Cash in hand

7,500

 

Cash at bank

 12,000

 

 

5,78,100

5,78,100

 

 

 

 

Prepare final accounts for the year ended March 31,2006, with following adjustments:

(a)   Stock on March 31,2006 was Rs37,500.

(b)   Bad debts Rs3,000; Provision for bad debts is to be made at 5% on debtors

(c)   Rent Prepaid were Rs1,200.

(d)   Wages outstanding were Rs 2,200.

(e)   Interest on capital to be allowed on capital at 6% per annum and interest on drawings to be charged @ 5% per annum.

(f)    Kajol is entitled to a Salary of Rs 1,500 per annum.

(g)   Prepaid insurance was Rs 500.

(h)   Depreciation was charged on Building, @ 4%; Plant and Machinery, @ 5%; Motor car, @ 10% and furniture and fixture, @ 5%.

(i)    Goods worth Rs 7,000 were destroyed by fire on January 20,2005. The Insurance company agreed to pay Rs 5,000 in full settlement of the claim.

 

 


Answer :

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