Advertisements
Advertisements
Question
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.
Advertisements
Solution
Calculation of interest on Harish’s drawings
|
|
Drawings × Period |
Product |
|
01 Feb. 17 to 31 Dec. 17 |
4,000 × 11 = |
44,000 |
|
01 May 17 to 31 Dec. 17 |
10,000 × 8 = |
80,000 |
|
30 June 17 to 31 Dec. 17 |
4,000 × 6 = |
24,000 |
|
31 Oct. 17 to 31 Dec. 17 |
12,000× 2 = |
24,000 |
|
31 Dec. 17 to 31 Dec. 17 |
4,000 × 0 = |
0 |
|
|
Sum of Product |
1,72,000 |
Interest on drawings = `1,72,000 × 7.5/100 xx 1/12 = "Rs" 1075`
APPEARS IN
RELATED QUESTIONS
Why is Profit and Loss Adjustment Account prepared? Explain.
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 2016-17 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.
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, 2017 amounted to Rs 70,000. Prepare Profit and Loss Appropriation Account.
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.
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.
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.
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.
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 2016-17 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.
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.
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, 2016 and March 31, 2017 were Rs 40,000 and Rs 60,000, respectively. Prepare the Profit and Loss Appropriation Account for the two years.
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, 2017 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, 2016;
Simmi, Rs 30,000; Sonu, Rs 60,000;
(ii) Current accounts balances on April 1, 2016;
Simmi, Rs 30,000 (cr.); Sonu, Rs 15,000 (cr.);
(iii) Partners drawings during the year amounted toSimmi, 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.
Sukesh and Vanita were partners in a firm. Their partnership agreement provides that:
- Profits would be shared by Sukesh and Vanita in the ratio of 3:2;
- 5% interest is to be allowed on capital;
- Vanita should be paid a monthly salary of Rs 600.
The following balances are extracted from the books of the firm on March 31, 2017.
|
Sukesh |
Verma |
|
| Capital Accounts |
40,000 |
40,000 |
| Current Accounts (Cr.) | 7,200 | 2,800 |
| Drawings (Cr.) | 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.
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.
On March 31, 2017, after the close of accounts, the capitals of Mountain, Hill, and Rock stood in the books of the firm at Rs 4,00,000, Rs 3,00,000, 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.
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.
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.
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.
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.
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.
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.
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?
Mickey, Tom, and Jerry were partners in the ratio of 5 : 3 : 2. On 31st March 2021, their books reflected a net profit of ₹ 2,10,000. As per the terms of the partnership deed, they were entitled to interest on capital which amounted to ₹ 80,000, ₹ 60,000 and ₹ 40,000, respectively. Besides this, a salary of ₹ 60,000 each was payable to Mickey and Tom.
Calculate the ratio in which the profits would be appropriated.
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 ______.
In case the deed provides for payment of interest on capital but does not specify the rate, the interest will be paid at which rate per annum?
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".
Which of the following items is not dealt through Profit and Loss Appropriation Account?
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 ______.
Identify the journal entry for transferring salaries paid to the Active Partner A to the Profit and loss Appropriation A/c.
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 ₹ ______.
What will be the interest on drawing @ 12.5% p.a. for Abhishek if he withdraws ₹ 5,000 once in month?
Pick the odd one out:
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:
