Page 55 - DEBKVOL-1

Chapter 2 Accounting for Partnership Firms—Fundamentals 2.27
.
8. A and B formed a partnership on 1st April, 2017. They agreed that out of profits:
(a) A should receive a salary of ` 500 per month;
(b) Interest on capitals should be allowed @ 6% p.a. and
(c) Remaining profits be divided equally.
A contributed a capital of ` 50,000 on 1st April, 2017 but B brought in his capital of ` 1,00,000 on 1st July,
2017. During the year, the drawings were: A ` 15,000 and B ` 20,000. Profit for the year ended 31st March,
2018 before the above noted salary and interest was ` 50,000.
Prepare Profit and Loss Appropriation Account and the Capital Accounts of the Partners.
[Ans.: Capital Accounts: A—` 62,250; B—` 1,02,750.]
9. A and B had been sharing profits and losses equally. After dividing the profits for the year 2017–18
` 60,000, it was agreed that they would share profits and losses from 1st April, 2017 in the ratio of
3 : 2. At that time it was also found that while preparing accounts for 2017–18, interest on capital
@ 5% p.a. was ignored. The fixed capitals of A and B were ` 1,00,000 and ` 80,000 respectively.
Pass a single adjustment entry to adjust the accounts of the partners. (Foreign 1995, Modified)
[Ans.: Dr. B’s Current A/c—` 5,600 and Cr. A’s Current A/c—` 5,600.]
10. Shiv and Shanker were partners in a firm sharing profits in 3 : 2 ratio. Their fixed capitals were ` 1,70,000
and ` 2,10,000 respectively. The Partnership Deed provides the following:
(a) Interest on Capital @ 12% p.a.
(b) Interest on Drawings @ 18% p.a.
Shiv withdrew ` 12,000 on 30th June, 2018 and Shanker withdrew ` 18,000 on 30th September, 2018. The
profit for the year ended 31st March, 2019 was ` 97,000, which was distributed among the partners without
providing for the above adjustments. Pass adjustment entry. (Foreign 2008, Modified)
[Ans.: Dr. Shiv's Current A/c and Cr. Shanker’s Current A/c by ` 6,636.]
11. A, B and C are partners in a firm. A and B sharing profits in the ratio of 5 : 3 and C receiving a salary of
` 150 per month, plus a commission of 5% on the profits after charging such salary and commission or
1/5th of the profits of the firm, whichever is larger. Any excess of the latter over the former is, under the
partnership agreement, to be borne personally by A.
The profits for the year ended 31st March, 2018 amounted to ` 10,710 after charging C’s salary.
Prepare Profit and Loss Appropriation Account showing the division of the profits of the year.
[Ans.: Share of Profit: A—` 6,183; B—` 3,825; C—` 2,502.]
[Hint: For C: (i) (` 150 × 12) + (5/105 × ` 10,710) = ` 2,310 or
(ii) C’s share = 1/5 [` 10,710 (Profit) + ` 1,800 (Salary)] = ` 2,502
C will get ` 2,502 since Option (ii) is higher than Option (i).
Deficiency = ` 2,502 – ` 2,310 = ` 192, borne by A.
Share of profit before adjusting deficiency: A = 5/8 × (` 12,510 – ` 2,310);
B = 3/8 × (` 12,510 – ` 2,310).]
12. Abha and Bhrat were partners. They shared profits and losses equally. On 1st April, 2014 their
Capital Accounts showed balances of ` 3,00,000 and ` 2,00,000 respectively. Calculate the amount of
profit to be distributed between the partners if the Partnership Deed provided for Interest on Capital
@ 10% p.a. and the firm earned a profit of ` 50,000 for the year ended 31st March, 2015. (Delhi 2016 C)
[Ans.: Profit Available for Distribution—NIL.]
13. Akshat, Bilal and Charu are partners dealing in the sale of sports equipment. Akshat without the knowledge of
Bilal and Charu is also running the business of supplying sports equipment to a few sports clubs in which
his son is a member. He is earning good profits from this business but did not inform Bilal and Charu about
this. Was Akshat correct in doing so? Indicate a value which he did not follow. (Delhi 2016 C)
[Ans.: No. The Values of Honesty and being Fair are Violated.]