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Prepare Profit and Loss Appropriation Account and Partners’ Capital Accounts, Assuming that Their Capitals Are Fluctuating. - Accountancy

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प्रश्न

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.

खातेवही
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उत्तर

Profit and Loss Appropriation Account

Dr.

 

 

 

 

Cr.

Particulars

Amount (Rs.)

Particulars

Amount (Rs.)

Interest on Capital :

 

 

Profit and Loss

 

1,00,300

Ramesh

9,600

 

Interest on Drawings :

 

 

Suresh

7,200

16,800

Ramesh

2,000

 

   

 

 

Suresh

2,500

4,500

Partners’ Salaries :

 

 

 

 

Ramesh

24,000

 

 

 

 

Suresh

36,000

60,000

 

 

 

Profit Transferred to :

 

 

 

 

 

Ramesh’s Capital {28,000 × (4/7)}

16,000

 

 

 

Suresh’s Capital {28,000 × (3/7)}

12,000

 

 

 

 

 

1,04,800

 

 

1,04,800

 

Partners’ Capital Account

Dr.

 

 

 

 

Cr.

Particulars

Ramesh

Suresh

Particulars

Ramesh

Suresh

Drawings

40,000

50,000

Cash

80,000

60,000

Interest on Drawings

2,000

2,500

Interest on Capital

9,600

7,200

Balance c/d

87,600

62,700

Partners’ Salaries

24,000

36,000

 

 

 

Profit & Loss Appropriation

16,000

12,000

 

1,29,600

1,15,200

 

1,29,600

1,15,200

 

Capital Ratio

=

Ramesh

:

Suresh

 

 

80,000

:

60,000

 

 

4

:

3

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Distribution of Profit Among Partners
  या प्रश्नात किंवा उत्तरात काही त्रुटी आहे का?
पाठ 2: Accounting for Partnership Firms-Fundamentals - Exercises [पृष्ठ १०१]

APPEARS IN

टीएस ग्रेवाल Accountancy - Double Entry Book Keeping Volume 1 [English] Class 12
पाठ 2 Accounting for Partnership Firms-Fundamentals
Exercises | Q 23 | पृष्ठ १०१

संबंधित प्रश्‍न

Harshad and Dhiman are in partnership since April 01, 2019. 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, 2019. Due to long illness, Harshad could not participate in business activities from August 1, to September 30, 2016. The profits for the year ended March 31, 2020 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.


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.


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 2013 amounted to Rs 40,000. Prepare the Profit and Loss Appropriation Account.


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).


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, 2020 was Rs 30,000. Prepare Profit and Loss Appropriation Account, indicating the amount finally due to each partner.


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.


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.


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, 2017.


Rishi is a partner in a firm. He withdrew the following amounts during the year ended March 31, 2020.

May 01, 2019 Rs 12000
July 31, 2019 Rs 6000
September 30, 2019 Rs 9000
November 30, 2019 Rs 12000
January 01, 2020 Rs 8000
March 31, 2020 Rs 7000

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


How will you deal with a change in the profit sharing ratio among existing partners?Take imaginary figures to illustrate your answer?


Aakriti and Bindu entered into partnership for making garment on April 01, 2016 without any Partnership agreement. They introduced Capitals of Rs 5,00,000 and Rs 3,00,000 respectively on October 01, 2016. 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 2017 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.


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 2013 amounted to Rs 40,000. Prepare the Profit and Loss Appropriation Account.


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.


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 2017 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.


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.


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.


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, 2016 and 2017 are Rs 40,000 and 60,000 respectively. Prepare Profit and Loss Appropriation Account.


E, F and G are partners sharing profits in the ratio of 3:3:2. According to 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 2021 amounted to ₹3,12,000. Calculate the amount of deficiency to be borne by E?


On 1st September 2020, twenty students of Modern College started their Partnership Firm in the name of “Be Safe” for selling sanitizers on digital mode. Since they were good friends of each other, they were not having any explicit agreement in place. All of them have agreed to invest ₹ 15,000/- each as capital. The books were closed on 31st March 2021, on which date the following information was provided by the firm:

PARTICULARS AMOUNT (₹)
Sale of Sanitisers 1,20,000
Cost of goods sold 50,000
Total Remuneration to partners 2,000 per month
Rent to a partner 1,000 per month
Manager’s Commission 5,000
Closing Stock as on March 31,2021 9,000
6% Fixed Deposit (made on 31.3.2021) 20,000

Calculate the amount of profits to be transferred to Profit and Loss Appropriation Account.


On 1st September 2020, twenty students of Modern College started their Partnership Firm in the name of “Be Safe” for selling sanitizers on digital mode. Since they were good friends of each other, they were not having any explicit agreement in place. All of them have agreed to invest ₹15,000/- each as capital. The books were closed on 31st March 2021, on which date the following information was provided by the firm:

PARTICULARS AMOUNT (₹)
Sale of Sanitisers 1,20,000
Cost of goods sold 50,000
Total Remuneration to partners 2,000 per month
Rent to a partner 1,000 per month
Manager’s Commission 5,000
Closing Stock as on March 31,2021 9,000
6% Fixed Deposit (made on 31.3.2021) 20,000

On 31st March 2021, Remuneration to Partners will be provided to the partners of “Be Safe” but only out of ______.


On 1st September 2020, twenty students of Modern College started their Partnership Firm in the name of “Be Safe” for selling sanitizers on digital mode. Since they were good friends of each other, they were not having any explicit agreement in place. All of them have agreed to invest ₹15,000/- each as capital. The books were closed on 31st March 2021, on which date the following information was provided by the firm:

PARTICULARS AMOUNT (₹)
Sale of Sanitisers 1,20,000
Cost of goods sold 50,000
Total Remuneration to partners 2,000 per month
Rent to a partner 1,000 per month
Manager’s Commission 5,000
Closing Stock as on March 31,2021 9,000
6% Fixed Deposit (made on 31.3.2021) 20,000

On 1st December 2020 one of the partners of the firm introduced additional capital of ₹30,000 and also advanced a loan of ₹40,000 to the firm. Calculate the amount of interest that Partner will receive for the current accounting period.


Consider the following statements

Statement 1: "No interest is to be charged on the drawings made by the partners if there is no mention in the Deed."

Statement 2: Specified provisions are required to be mentioned in the partnership deed to charge interest on drawings.


In a case where a partner may be guaranteed a minimum amount by way of his share in profits. If in any year, the share of profits is less than the guaranteed amount, the deficiency is made good by the guaranteeing partners' in which ratio?


Which of the following items is not dealt through Profit and Loss Appropriation Account?


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:


Rahul and Shubham are partners in a partnership Rahul withdraw ₹ 4,000 during the year as drawings. Interest on drawings is charged @ 15% p.a. The amount of interest on drawings at the end of the year will be ______.


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


Which of the following will not be 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 from operating activities before tax will be ₹ ______.


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


Richa and Anmol are partners sharing profits in the ratio of 3 : 2 with capitals of ₹ 2,50,000 and ₹ 1,50,000 respectively. Interest on capital is agreed @6% p.a. Anmol is to be allowed an annual salary of ₹ 12,500. During the year ended 31st March 2023, the profits of the year prior to calculation of interest on capital but after charging Anmol’s salary amounted to ₹ 62,000. A provision of 5% of this profit is to be made in respect of manager’s commission.

Following is their Profit & Loss Appropriation Account. 

Particulars (₹) Particulars (₹)
To Interest on Capital   By Profit & loss account (After manager’s commission) ___(2)___
Richa ______    
Anmol ______    
To Anmol’s Salary a/c 12,500    
To Profit transferred to:      
Richa’s Capital A/C (1) ___(1)___    
Anmol’s Capital A/c ______    
  ______   ______

The amount to be reflected in blank (1) will be:


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