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Prepare Firm’S Profit and Loss Appropriation Account. - Accountancy

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प्रश्न

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, 2015 amounted to Rs 40,000;
Prepare firm’s Profit and Loss Appropriation Account.

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उत्तर

Profit and Loss Appropriation Account

Dr.

 

 

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Partner’s Salary

 

 

Profit and Loss

40,000

Maneesh

 

4,800

Interest on Drawings

 

 

 

 

 

Maneesh

800

 

Partner’s commission

 

 

Girish

700

1,500

Girish {(40,000 – 4,800) × (10/100)}

3,520

 

 

 

Interest on Capital :

 

 

 

 

Mannesh

7,000

 

 

 

 

Girish

5,600

12,600

 

 

 

Profit transferred to :

 

 

 

 

Maneesh’s Current

10,290

 

 

 

 

Girish’s Current

10,290

20,580

 

 

 

 

41,500

 

 

41,500

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Distribution of Profit Among Partners
  क्या इस प्रश्न या उत्तर में कोई त्रुटि है?
अध्याय 2: Accounting for Partnership Firms-Fundamentals - Exercises [पृष्ठ १००]

APPEARS IN

टीएस ग्रेवाल Accountancy - Double Entry Book Keeping Volume 1 [English] Class 12
अध्याय 2 Accounting for Partnership Firms-Fundamentals
Exercises | Q 19 | पृष्ठ १००

संबंधित प्रश्न

If a fixed amount is withdrawn on the first day of every quarter, for what period

the interest on total amount withdrawn will be calculated?


Aakriti and Bindu entered into partnership for making garment on April 01, 2019 without any Partnership agreement. They introduced Capitals of Rs 5,00,000 and Rs 3,00,000 respectively on October 01, 2019. 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 2020 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.


The partnership agreement between Maneesh and Girish provides that : 

  1. Profits will be shared equally;
  2. Maneesh will be allowed a salary of Rs 400 p.m;
  3. Girish who manages the sales department will be allowed a commission equal to 10% of the net profits, after allowing Maneesh’s salary;
  4. 7% interest will be allowed on partner’s fixed capital;
  5. 5% interest will be charged on partner’s annual drawings;
  6. 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, 2019 amounted to Rs 40,000; 
    Prepare firm’s Profit and Loss Appropriation Account.

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 March 31, 2019 and March 31, 2017 were Rs 40,000 and Rs 60,000, respectively. Prepare the Profit and Loss Appropriation Account for the two years.


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, 2017 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).


 

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 2019 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.


Raj and Neeraj are partners in a firm. Their capitals as on April 01, 2019 were Rs 2,50,000 and Rs 1,50,000, respectively. They share profits equally. On July 01, 2019, 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, 2020.


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.


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, 2019

600

 

June 30, 2019

 500

 

August 31, 2019

1,000

 

November 1, 2019

400

 

December 31, 2019

1,500

 

January 31, 2020

 300

 

March 01, 2020

 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 account are closed on March 31, 2020, every year.


The capital accounts of Moli and Golu showed balances of Rs 40,000 and Rs 20,000 as on April 01, 2019. 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, 2019. 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.


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


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, 2016. 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, 2017 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.


Rahul, Rohit and Karan started partnership business on April 1, 2016 with capitals of Rs 20,00,000, Rs 18,00,000 and Rs 16,00,000, respectively. The profit for the year ended March 2017 amounted to Rs 1,35,000 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.


Following is the extract of the Balance Sheet of, Neelkant and Mahdev as on March 31, 2017:

Balance Sheet as at March 31, 2017 

 

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 2017)

8,00,000

 

 

 

30,00,000

 

30,00,000

During the year Mahadev’s drawings were Rs 30,000. Profits during 2017 is Rs 10,00,000. Calculate interest on capital @ 5% p.a for the year ending March 31, 2017.


Sunflower and Pink Rose started partnership business on April 01, 2016 with capitals of Rs 2,50,000 and Rs 1,50,000, respectively. On October 01, 2016, 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, 2017.


Rishi is a partner in a firm. He withdrew the following amounts during the year ended March 31, 2018.

May 01, 2017 Rs 12,000
July 31, 2017 Rs 6,000
September 30, 2017 Rs 9,000
November 30, 2017 Rs 12,000
January 01, 2018 Rs 8,000
March 31, 2018 Rs   7,000

Interest on drawings is charged @ 9% p.a. Calculate interest on drawings.


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, 2016

600

 

June 30, 2016

 500

 

August 31, 2016

1,000

 

November 1, 2016

400

 

December 31, 2016

1,500

 

January 31, 2017

 300

 

March 01, 2017

 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, 2017, every year.


Raj and Neeraj are partners in a firm. Their capitals as on April 01, 2017 were Rs 2,50,000 and Rs 1,50,000, respectively. They share profits equally. On July 01, 2017, 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, 2018.


Harish is a partner in a firm. He withdrew the following amounts during the year 2017 :

 

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, 2017.


On March 31, 2017, 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, 2017, 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.


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 2015 are: (i) Rs 2,50,000; (ii) 3,60,000.


Chhavi and Neha were partners in firm sharing profits and losses equally. Chhavi withdrew a fixed amount at the beginning of each quarter. Interest on drawings is charged @ 6% p.a. At the end of the year, interest on Chhavi's drawings amounted to ₹ 900. Pass necessary journal entry for charging interest on drawings.


Mohan and Sham are partners in a firm. State whether the claim is valid if the partnership agreement is silent in the following matters:

"Shyam wants interest on capital to be credited @6% per annum".


What would be the journal entry for the Share of Profit or Loss after appropriation?


If the interest on drawings is omitted to be recorded, what will be the journal entry?


E, F and G are partners sharing profits in the ratio of 3 : 3 : 2. As per the partnership agreement, G is to get a minimum amount of ₹ 80,000 as his share of profits every year and any deficiency on this account is to be personally borne by E. The net profit for the year ended 31st March 2020 amounted to ₹ 3,12,000. What will be the amount of deficiency to be borne by E?


Ram, Shyam and Balweer are partners. They share profit and loss equally. Ram is guaranteed to get ₹ 30,000 profit. Any deficiency that arises, will be borne by Shyam. During the year, they earned a profit of ₹ 60,000. Which of the following statement/statements is/are correct as per the above information:


When is the Profit and Loss Appropriation Account prepared?


Pick the odd one out:


Where is the Interest in drawings recorded in the Current Account?


Read the following information and answer the given question:

Krishika alumni of IIM Ahemdabad initiated her startup Krishika Ltd. in 2018. The profits of Krishika Ltd. in the year 2019-20 after all appropriations was ₹ 31,25,000. This profit was arrived after taking into consideration the following items:

S. No. Particulars Amount (₹)
1. Gain on sale of fixed tangible assets 12,50,000
2. Goodwill written off 7,80,000
3. Transfer to General Reserve 8,75,000
4. Provision for taxation 4,37,500

Additional information:

Particulars 31.3.2020 (₹) 31.3.2019 (₹)
Prepaid Expenses 7,50,000 5,00,000
Inventory 10,50,000 8,20,000
Trade Payable 4,50,000 3,50,000
Trade Receivables 6,20,000 5,90,000

Operating profit before working capital changes will be ₹ ______.


Read the following information and answer the given question:

Krishika alumni of IIM Ahemdabad initiated her startup Krishika Ltd. in 2018. The profits of Krishika Ltd. in the year 2019-20 after all appropriations was ₹ 31,25,000. This profit was arrived after taking into consideration the following items:

S. No. Particulars Amount (₹)
1. Gain on sale of fixed tangible assets 12,50,000
2. Goodwill written off 7,80,000
3. Transfer to General Reserve 8,75,000
4. Provision for taxation 4,37,500

Additional information:

Particulars 31.3.2020 (₹) 31.3.2019 (₹)
Prepaid Expenses 7,50,000 5,00,000
Inventory 10,50,000 8,20,000
Trade Payable 4,50,000 3,50,000
Trade Receivables 6,20,000 5,90,000

Cash flow from operating activities will be ₹ ______.


If the interest on capital is omitted, what will be the journal entry during the situation?


When the profits are guaranteed by the partners on the old profit sharing ratio, which of the following is not true?


Read the following hypothetical situation and answer the following question on its basis:

Rudra, Dev and Shiv were partners in a firm sharing profits in the ratio of 5 : 3 : 2. Their fixed capitals were ₹ 6,00,000, ₹ 4,00,000, and ₹ 2,00,000, respectively. Besides his capital, Shiv had given a loan of ₹ 75,000 to the firm. Their partnership deed provided for the following:

  1. Interest on capital @ 9% p.a.
  2. Interest on partner’s drawings @ 12% p.a.
  3. Salary to Rudra ₹ 30,000 per month, and to Dev ₹ 40,000 per quarter.
  4. Interest on Shiv’s loan @ 9% p.a.

During the year, Rudra withdrew ₹ 50,000 at the end of each quarter; Dev withdrew ₹ 50,000 in the beginning of each half year; and Shiv withdrew ₹ 70,000 at the end of each half year.

The profit of the firm for the year ended 31-3-2022 before allowing interest on Shiv’s loan was ₹ 7,06,750.

How much amount of net profit will be transferred to the Profit and Loss Appropriation A/c?


Read the following hypothetical situation and answer the following question on its basis:

Rudra, Dev and Shiv were partners in a firm sharing profits in the ratio of 5 : 3 : 2. Their fixed capitals were ₹ 6,00,000, ₹ 4,00,000, and ₹ 2,00,000, respectively. Besides his capital, Shiv had given a loan of ₹ 75,000 to the firm. Their partnership deed provided for the following:

  1. Interest on capital @ 9% p.a.
  2. Interest on partner’s drawings @ 12% p.a.
  3. Salary to Rudra ₹ 30,000 per month, and to Dev ₹ 40,000 per quarter.
  4. Interest on Shiv’s loan @ 9% p.a.

During the year, Rudra withdrew ₹ 50,000 at the end of each quarter; Dev withdrew ₹ 50,000 in the beginning of each half year; and Shiv withdrew ₹ 70,000 at the end of each half year.

The profit of the firm for the year ended 31-3-2022 before allowing interest on Shiv’s loan was ₹ 7,06,750.

What will the amount of interest on drawings of the partners?


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