Question

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 Rs 1,00,000 and Rs 50,000 on 1st 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 the partnership were as follows :

1) Singh, Gupta and Shakti will share profits in the ratio of 2:2:1.

2) Interest on capital will be provided @ 6% p.a.

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

a. Identify any two values which the firm wants to communicate to the society.

b. Prepare Profit and Loss Appropriation Account for the year ending 31st March 2013.

Answer 1

a) Value involved in the above scenario:

1. Conservation of the environment
2. Encouraging Talent

b) 

Profit and Loss Appropriation Account For the year ended April 01, 2012
Particulars	Rs	Particulars	Rs
To Interest on capital A/c:    Singh        6,750    Gupta       3,150 To Profit transferred to:   Singh’s capital A/c   63,600   Gupta’s Capital A/c  63,600   Shakti’s Capital A/c  31,800	9,900       1,59,000	By Profit and Loss A/c	1,68,900
	1,68,900		1,68,900

Working Capital:

Calculation of Interest on Capital:

Interest on Singh's Capital:

On 1,00,000 for the whole year:

`100000 xx 6/100 = 6000`

On 25,000 for 6 month (from Sept.30 to Mar. 31)

`25000 xx 6/100 xx 6/12 = 750`

Total Interest on Singh's Capital = 6,000+ 750 = 6,750

Interest on Gupta's Capital:

On 50,000 for whole year:

`50000 xx 6/100 = 3000`

On 10,000 for 3 month (from Jan.01 to Mar. 31)

`10000 xxx 6/100 xx 3/12 = 150`

Total Interest on Singh's Capital = 3,000+ 150 = 3,150