D. K. Goel solutions for Accountancy Part 1 and 2 [English] Class 12 ISC chapter 1 - Accounting for Partnership Firms - Fundamentals [Latest edition]

Based on the above information, choose the correct answer:

Interest on capital ______.

Based on the above information, choose the correct answer:

Interest on loan by Shruti ______.

Based on the above information, choose the correct answer:

Interest on loan to Vandna ______.

Based on the above information, choose the correct answer:

Shruti’s share of the loss will be ______.

Based on the above information, you are required to answer the following question:

Rent payable to Kanishk will be ______.

Based on the above information, you are required to answer the following question:

Salary payable to Lalit will be ______.

Based on the above information, you are required to answer the following question:

Net profit for the year will be ______.

Based on the above information, you are required to answer the following question:

Kanishk’s share of profit will be ______.

Answer the following question on the basis of the above:

Rent payable to Navdeep will be ______.

Answer the following question on the basis of the above:

Net profit for the year will be ______.

Answer the following question on the basis of the above:

Interest on capital will be ______.

Answer the following question on the basis of the above:

Divisible profit for the year will be ______.

Interest on Trisha’s drawings will amount to ______.

Interest on capital will be recorded ______.

Shashi’s share of profit will be ______.

Shashi’s current account balance will be ______.

Interest on drawings will be recorded ______.

The net profit of the firm will be ______.

Interest on drawings charged from Nixie will be ______.

Govind introduced additional capital of ₹ 2,00,000 and advanced a loan of ₹ 1,00,000 on 1st October 2023. Interest allowed to Govind will be:

Chaman withdrew ₹ 5,000 per month for his personal use at the beginning of each month. Interest on drawings will be charged for an average period of:

Ayush expressed his desire that his son Suyash be admitted as a partner for a 1/6th share, which he will forgo in his favour. Chaman has no objection to this, but Govind objects to this proposal.

All partners agreed that Govind is to be given a minimum profit of ₹ 70,000 each year. Any deficiency is to be borne by Ayush and Chaman in the ratio of 2 : 3. Losses for the year ending 31st March, 2024, were ₹ 1,20,000. Deficiency borne by Ayush will be:

Ajay and Vijay are in partnership, sharing profits and losses in the ratio of 3 : 1. On 1st April, 2021, their capitals were ₹ 1,00,000 and ₹ 90,000. The terms of their partnership are as follows:

1. Interest on capital is to be allowed at @ 6% per annum.
2. Interest on drawings to be charged @ 4% per annum.
3. Partners to get a salary of ₹ 1,000 each per month.
4. Vijay is to get a commission of 2% on the correct net profit.
5. Any partner taking a loan from the firm is to be charged interest on it @ 8% per annum.

Ajay had borrowed ₹ 10,000 from the firm on 1st October, 2021.

Vijay had withdrawn ₹ 8,000 on 1st July, 2021.

During the year ending 31st March, 2022, the firm earned a net profit of ₹ 60,000 before any of the provisions mentioned in the partnership deed. You are required to prepare for the year ending 31st March, 2022:

1. Profit and Loss Appropriation Account.
2. Ajay’s Capital Account.

Hints:

1. Interest on Loan given to Ajay will be added to Net Profit. As such, Net Profit Credited to P & L App. A/c will be ₹ 60,400.
2. Commission to Vijay will be 2% of ₹ 60,400.

Akhil, Nitin and Suraj are partners in a firm. Their terms of agreement are as follows:

On 1st April, 2022, their capitals were:

On 1st December 2022, Akhil introduced further capital of ₹ 40,000.

The drawings of the partners were:

• Suraj withdrew	₹ 3,000 on 1st August, 2022
  	₹ 6,000 on 1st December, 2022

• Nitin withdrew only his salary.

Akhil withdrew a certain fixed amount at the beginning of every month, on which he was charged an interest of ₹ 520 at the end of the year, at the rate mentioned in the deed.

The profits of the firm for the financial year 2022-23, before any of the above adjustments, were ₹ 2,75,000.

You are required to:

1. Calculate the drawings made by Akhil every month.
2. Pass the journal entry for capital introduced by Akhil.
3. Prepare the Profit and Loss Appropriation Account of the firm for the year 2022-23.

Krish and Shail entered into a partnership on 1st October, 2022, with capital contributions of ₹ 48,000 and ₹ 36,000, respectively.

On 1st January, 2023, Shail advanced a loan of ₹ 12,000 to the firm. The terms of the partnership agreement are as follows:

1. Interest on capital to be allowed at 12% per annum.
2. Interest on drawings to be charged @ 10% per annum.
3. Krish is to be entitled to a commission of 2% on the turnover.
4. Each partner is to get a salary of ₹ 1,200 per month.
5. Profits and losses are to be shared in the ratio of 4 : 3.

The turnover for the period under consideration was ₹ 2,00,000. The drawings of the partners were Krish, ₹ 4,000, and Shail, ₹ 2,000.

The profit of the firm for the year ended 31st March, 2023, before providing for any interest, was ₹ 1,10,000.

You are required to prepare for the year 2022-23:

1. Profit and Loss Appropriation Account.
2. Shail’s Loan Account.

Hint: Interest on Capital, interest on drawings and partner's salary is to be calculated for half year only.

Tanuj and Ravi are partners in a business with capital balances of ₹ 1,50,000 and ₹ 1,00,000 respectively on 1^st April, 2022.

Their partnership deed contains the following clauses:

1. Interest on capital to be allowed @ 10% per annum.
2. Interest on drawings to be charged @ 4% per annum.
3. Tanuj to be allowed a commission @ 5% of the trading profit after charging his commission.
4. Ravi to be allowed an annual commission of ₹ 10,000.

Additional information:

During the year 2022-23:

• Tanuj withdrew ₹ 6,000 at the end of every quarter.
• The trading profit of the firm was ₹ 84,000.
• The firm’s divisible profit was ₹ 46,360.
• On 1st October, 2022, Ravi permanently withdrew ₹ 20,000 from his capital.

You are required to do the following:

1. Pass the journal entries to record:
   
   1. The permanent withdrawal made by Ravi.
   2. The distribution of the divisible profits between the partners.
   3. The adjusting entry for commission due to Ravi.
2. Calculate the interest on capital allowed to:
   1. Tanuj
   2. Ravi
3. Calculate the commission allowed to Tanuj.
4. Calculate the interest on drawings charged from Tanuj.

Amit and Iqbal are partners in a business. Their partnership deed contained the following clauses:

1. Interest on drawings to be charged @ 6% per annum.
2. Amit to get a salary of ₹ 1,000 per month.
3. Iqbal to get an annual commission of ₹ 10,000.
4. Any partner taking a loan from the firm to be charged interest on it @ 8% per annum.

You are required to:

1. Give the closing journal entry for interest on the loan due from Amit.
2. Find the opening capital balance of the partners on 1^st April, 2022, by preparing the Partner’s Capital Accounts for the year 2022-23.

Deb, Riza and Ved entered into a partnership on 1st July, 2023, without any agreement as to profit sharing, except that Deb guaranteed that Ved’s share of profit, after considering interest into account, would not be less than ₹ 8,500 per annum.

The initial capital provided by the partners was as follows:

In addition to the above capital, Deb and Riza gave temporary loans to the partnership firm as follows:

• Deb advanced ₹ 18,000 on 1st October, 2023, and was repaid on 1st April following.
• Riza advanced ₹ 40,000 on 1st September, 2023, and it was repaid, along with interest, on 1st December, 2023.

The profit of the firm for the year ended 31st March, 2024, before providing for any interest, was ₹ 21,000.

You are required to prepare for the year 2023-24:

1. Profit and Loss Appropriation Account.
2. Riza’s Loan Account.
3. Ved’s Capital Account.

Krish and Tarun are partners in a firm with capitals of ₹ 40,000 and ₹ 60,000. As per their partnership deed:

1. Interest on capital is to be allowed to them @ 5% per annum.
2. Profits are to be shared in the ratio of 3 : 2.

The trading profits for the year 2023-24 was ₹ 3,600.

You are required to calculate the interest on capital allowed to the partners in the year 2023-24.

Deepa, Ridhi and Adit are partners in a firm. Following are the particulars of their Capital and Drawings Accounts for the year 2023-24:

According to their partnership deed:

• Profits were to be shared in the ratio of 2 : 2 : 1.
• Interest on capital to be allowed @ 5% per annum.
• Interest on drawings to be charged @ 8% per annum.

The trading profits of the firm for the financial year 2023-24 were ₹ 50,000, before considering the discrepancy of having recorded the inventory at ₹ 10,000 when its realisable value was ₹ 4,000.

(i) You are required to give:

1. The adjusting entry and closing entry for Drawings made by Ridhi.
2. The adjusting entry and closing entry for Interest on Drawings.
3. The adjusting entry and closing entry for Interest on Capital.
4. The entry to close the Adit’s Loan A/c.

(ii) The accountant of the firm distributed the divisible profit among the partners in the ratio 2 : 1 : 2 instead of in the ratio mentioned in the deed.

You are required to rectify the lapse in accounting by passing a single adjusting entry.

(A) Nida and Pia, each doing business as sole proprietors, started a partnership on 1^st April 2023, with capital contributions of ₹ 5,00,000 and ₹ 4,00,000.

Their partnership deed contained the following clauses:

1. Interest on capital to be allowed @ 10% per annum to both the partners.
2. Annual commission of 30,000 to be allowed to Nida.
3. Interest on drawings to be charged @ 4% per annum.
4. The profit-sharing ratio to be 3 : 2.

Nida withdrew 10,000 during the year 2023-24.

The trading profit of the firm for the year ending 31^st March 2024, was 70,640 before considering accrued interest on investments of ₹ 1,600.

Although the accountant had recorded the drawings made by the partners, he distributed the profits before charging interest on drawings from Nida but after considering the following:

• Accrued interest on investments of ₹ 1,600.
• Allowing the appropriations of interest on capital and commission.

You are required to prepare the following for the year 2023-24:

1. Profit and Loss Appropriation Account as prepared by the accountant of the firm.     [5.5]
2. Nida’s Drawings Account.     [2]

(B) At the beginning of the next financial year, the accountant realised his error of not having charged interest on drawings from Nida. He rectified the error by passing a single adjustment entry.     [2.5]

You are required to give the rectified adjustment entry passed by the accountant.

Raman, Shivam and Namita are partners sharing profits and losses in the ratio of 1 : 1 : 2. On 31^st March, 2024, their books showed the following balances:

On 1^st April, 2024, they adopted the fluctuating capital method of accounting, thereby transferring the current account balances to their capital accounts.

Their partnership deed provided for the following:

• Interest on capital to be allowed @ 10% per annum.
• A monthly allowance of ₹ 8,000, ₹ 6,000 and ₹ 4,000 to be allowed to Raman, Shivam and Namita respectively.
• Interest on loan taken from a partner to be allowed at 10% per annum. Additional loan was taken from Shivam on 1^st October, 2024 amounting to ₹ 50,000.

During the year ending 31^st March, 2025, the firm earned a net profit of ₹ 5,00,000 before allowing interest on Shivam’s loan.

For the year ending 31^st March, 2025 you are required to:

1. Prepare Partners’ Capital a/c (6)
2. Pass adjusting entry for interest on loan from Shivam. (1)
3. Prepare Shivam’s loan account. (2)
4. Pass Journal entries for transferring the current account balances of Shivam and Namita to their capital accounts. (1)

State the ‘liability of a partner’ in a partnership firm.

What is meant by ‘mutual agency’ in the case of partnership?

Does a partnership firm has a separate legal entity? Give a reason in support of your answer.

Six friends started a partnership business by investing ₹ 2,00,000 each. They decided to share profit equally. Name the terms by which they will be called individually and collectively.

What is meant by “Unlimited Liability of a Partner”?

The business of a partnership firm may be carried on by all the partners or any one of them acting for all. One of the important implications of this statement is that every partner is entitled to participate in the conduct of the affairs of its business. State the second important implication of this statement.

What is the maximum number of partners that a partnership firm can have? Name the Act that provides for the maximum number of partners in a partnership firm.

Gupta and Sharma were partners in a firm. They wanted to admit five more members to the firm. List any two categories of individuals other than minors who cannot be admitted by them.

What is a partnership deed?

How are mutual relations of partners governed in the absence of Partnership Deed?

State the provisions of the Indian Partnership Act regarding the payment of remuneration to a partner for the services rendered.

Is a sleeping partner liable to the acts of other partners?

Give any two reasons in favour of keeping a Partnership Deed.

State four important points which must be incorporated in a Partnership Deed. 

Mention any four provisions of the Partnership Act in the absence of a Partnership Deed.

In the absence of a Partnership Deed, what are the rules relating to interest on a partner’s capital?

In the absence of a Partnership Deed, what are the rules relating to interest on a loan given by a partner?

In the absence of a Partnership Deed, what are the rules relating to the profit-sharing ratio?

In the absence of a Partnership Deed, what are the rules relating to interest on a partner’s drawings?

A and B are partners, but they do not have any partnership agreement. How will they solve the following disputes between them?

1. A wants that profits should be shared in the capital ratio.
2. B wants that he should be paid a salary for devoting more time for the business of the firm.

State two elements of the partnership deed.

Is it necessary to have a partnership agreement in writing?

What share of profits would a ‘sleeping partner’ who has contributed 75% of the total capital get in the absence of a deed?

In the absence of any provision in the partnership deed, at what rate is a working partner entitled for remuneration?

Do all forms of business organisations prepare a Profit and Loss Appropriation Account?

Why is the profit and loss appropriation account prepared?

Name any six items which are shown in the ‘Profit and Loss Appropriation Account’.

Distinguish between a Profit and Loss Account and a Profit and Loss Appropriation Account.

Distinguish between a charge against profit and an appropriation out of profit.

Can a partner be exempted from sharing the losses in a firm? If yes, under what circumstances?

Why is it that the capital account of a partner does not show a “Debit Balance” in spite of regular and consistent losses year after year?

When the partner capitals are fixed, where will the drawing made by a partner be recorded?

If the partner’s capital accounts are fixed, where will you record the following item?

Salary payable to a partner.

If the partner’s capital accounts are fixed, where will you record the following item?

Fresh capital introduced by a partner.

If the partner’s capital accounts are fixed, where will you record the following item?

Share of profit

If the partner’s capital accounts are fixed, where will you record the following item?

Interest on drawings

Mention the items that may appear on the debit side of the capital account of a partner when the capitals are fluctuating.

Mention the items that may appear on the credit side of the capital account of a partner when the capitals are fluctuating.

Give two circumstances under which the fixed capitals of partners may change.

What is the nature of current accounts when partner’s capital accounts are maintained on a fixed basis?

Distinguish between the drawing account and the current account of a partner.

What are the reasons for keeping separate capital and current accounts for each partner?

Under the fluctuating capital method, why is it necessary to open a separate drawings account for each partner?

What is the adjustment and closing entry required at the time of finalisation of accounts for interest on capital allowed to partners, assuming that accounts are maintained under a fixed capital system?

In what way would you deal with rent paid to a partner for the use of his premises by the firm in which he is a partner and why?

What is interest on capital?

Give one reason why interest on capital is allowed to partners.

Give one reason why partners are charged interest on drawings.

Distinguish between drawings against profit and drawings against capital.

Mention two points of difference between the legal provisions regarding interest on loans and interest on drawings.

A has invested ₹ 1,00,000 and B ₹ 25,000, and they earned a profit of ₹ 15,000. How much profit would A and B get?

State the two situations in which interest on a partner’s capital is generally provided.

In the absence of provision in the partnership deed, in which ratio is the deficiency arising out of the guarantee of profits to a partner borne by the other partners?

A and B are partners in a firm. State by giving reasons whether their claims are valid if the partnership deed is silent in the following matters:

1. B had advanced a loan to the firm. He claims interest at the usual interest rate charged by banks. The rate of interest is 12% p.a.
2. A has contributed ₹ 1,00,000, and B ₹ 50,000, as capital. B wants profits to be shared equally.

The following differences have arisen among A, B and C. Give your decision regarding the same:

1. A used ₹ 1,00,000 belonging to the firm and made a profit of ₹ 75,000 in speculation. B and C want that A should return ₹ 1,75,000 to the firm, while A wants to return ₹ 1,00,000 only.
2. A used ₹ 50,000 belonging to the firm and suffered a loss of ₹ 20,000 in speculation. He wants to return only 30,000.
3. A and B want to admit Mohan as a new partner, but C does not agree.
4. A and B want to purchase goods from Raghubir for the firm, but C does not agree.

How will you settle the following dispute?

A and B are equal partners. A has provided a capital of ₹ 5,00,000, whereas B has provided only ₹ 1,00,000 as capital. B, however, has advanced ₹ 2,00,000 as a loan to the firm. What interest, if any, will be given to A and B?

How will you settle the following dispute?

A has drawn ₹ 50,000 from the firm for personal use. B and C demand that interest should be charged @ 12% per annum.

How will you settle the following dispute?

C proposed that interest on drawings should be charged. D opposes it.

Give the provisions of the Partnership Act with respect to the interest on capital of the partners.

State the closing entries for:

1. Rent paid to a partner.
2. Interest on loans allowed to partners.

State two differences between interest on capital allowed to partners and interest on drawings charged to partners.

The firm with X, Y and Z as partners earned a profit of ₹ 3,00,000 during the year ended 31st March, 2011. 20% of this profit was to be transferred to the General Reserve. Pass the necessary journal entry for the same.

What accounting steps are taken by a partnership firm when a new partner is unable to bring the business guaranteed by him?

State the provisions of the Indian Partnership Act, 1932, regarding the charging of interest on drawings from a partner when the firm has a partnership deed.

State the provisions of the Indian Partnership Act, 1932, regarding the charging of interest on drawings from a partner when the firm does not have a partnership deed.

Give the adjusting entry and the closing entry for recording commission allowed to a partner when the firm follows the fixed capital method.

State giving reason whether interest on a loan given by a partner to the firm be paid if there are losses.

State two differences between a partner’s loan account and a partner’s capital account.

Why salary and commission paid to partners are recorded in the Profit and Loss Appropriation Account instead of the Profit and Loss Account?

Mention a case where a profit and loss appropriation account will be prepared even if the profit and loss account discloses a net loss.

Mita and Mohan are partners sharing profits and losses in the ratio of 1 : 2 with capitals of ₹ 15,000 and ₹ 25,000, respectively. The partnership deed provides for interest on capital @ 6% per annum. The trading loss for the year ending 31st March, 2016, was ₹ 1,500. State, giving reason, the amount of interest on capital which will be allowed to the partners.

Mittal and Sons earned a profit of ₹ 2,75,000 during the year ended 31st March, 2016. 10% of this profit was to be transferred to the Investment Fluctuation Reserve. Pass the necessary journal entry for the same.

Give the adjusting entry and closing entry for interest on a loan taken by a partner from the firm when the firm follows the Fluctuating Capital Method.

Mention two items that may appear on the debit side of a partner’s fixed capital account.

Mention two items that may appear on the credit side of a partner’s fixed capital account.

How will a firm deal with a situation when its partnership deed provides for interest on capital, but the profit earned by it is not enough to do so at the rate mentioned in the deed?

Prabhakar and Ratnakar are partners. Prabhakar advanced a loan of ₹ 8,00,000 to the firm on 1st November, 2025 without any agreement regarding rate of interest. At the end of the year they agreed interest @ 9% p.a. Should interest on loan from Prabhakar be allowed @ 6% p.a. or 9% р.а.?

Anna and Bobby were partners sharing profits and losses in the ratio of 5 : 3. On 1st April, 2023, 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 ₹ 45,000 for the year ended 31st March, 2024.

Vishu and Himanshu are partners in a firm. From the following Balance sheet and information given, calculate interest on capitals @ 6% p.a. for the year, ending 31st March, 2026:

During the year ending 31st March, 2026, Vishu's drawings were ₹ 27,000 and Himanshu's drawings ₹ 18,000. Profit earned by the firm during 2025-26 was ₹ 87,000.

Show the distribution of profit.

Lucky, Paras and Palak are partners in a firm. Palak is guaranteed minimum profit of ₹ 40,000 as her share of profit, Paras is entitled to salary of ₹ 15,000 p.m.

The firm earned a profit of ₹ 90,000 for the year ended 31st March 2026 before allowing rent of ₹ 10,000 p.m. to Lucky for use of his property by the firm.

You are required to pass necessary Journal entries in the books of the firm.

Find out the amount of interest on capitals payable for 2025-26 and pass Adjusting Entry for Interest on Capital.

Pass adjusting and closing entries for Interest on Drawings.

How much interest on capital will be received by each partner?

1. How much amount of net profit will be transferred to Profit and Loss Appropriation A/c? 
2. What will be the amount of interest on drawings of the partners?

What is the profit for the year distributed between the partners?

X and Y are partners in a firm. They do not have any partnership deed. What should be done in the following cases:

1. X has invested ₹ 10,00,000 and Y only ₹ 5,00,000 as capital. X wants interest on capital @ 8% p.a.
2. X spends twice the time that Y devotes to the business. He wants a salary of ₹ 10,000 per month for the extra time spent by him.
3. X wants to introduce his son Rajesh into the business for a 25% share to be given out of his share of profits. Y objects to it.
4. X has advanced a loan of ₹ 2,00,000 to the firm. He claims interest @ 9% p.a.
5. Y withdraws ₹ 10,000 per month from the firm for his personal use. X claims that interest on drawings @ 12% p.a. be charged from Y.

X and Y are partners sharing profits in the ratio of 2 : 1. The undermentioned trial balance was extracted from their books as at 31st March, 2024:

You are required to prepare a Trading Profit and Loss Account and Profit and Loss Appropriation Account for the year ended 31st March, 2024, and a Balance Sheet as on that date. The following adjustments are to be made:

1. The value of the stock on March 31, 2024, was ₹ 64,000.
2. Charge depreciation on Buildings at 10%.
3. Provide for outstanding rent of ₹ 2,400.
4. Partners are entitled to interest on Capital @ 5% and X is entitled to a salary of ₹ 48,000 p.a.

Girish and Satish are partners in a firm. Their capitals on April 1, 2023, were ₹ 5,60,000 and ₹ 4,75,000, respectively. On August 1, 2023, they decided that their capitals should be ₹ 5,00,000 each. The necessary adjustments in the capitals were made by introducing or withdrawing cash. Interest on capital is allowed at 6% p.a. You are required to compute interest on capital for the year ending March 31, 2024.

On 1st April, 2023, A and B commenced business with capitals of ₹ 6,00,000 and ₹ 2,00,000, respectively. On 31st March, 2024, the net profit (before taking into account the provisions of deed) was ₹ 2,40,000. Interest on capitals is to be allowed at 6% p.a. B was entitled to a salary of ₹ 60,000 p.a. The drawings of the partners A and B were ₹ 60,000 and ₹ 40,000, respectively. The interest on drawings for A being ₹ 2,000 and B ₹ 1,000. Assuming that A and B are equal partners, prepare the Profit and Loss Appropriation A/c and Partner’s Capital Accounts as at 31st March, 2024.

X and Y are partners with capitals of ₹ 1,00,000 and ₹ 80,000, respectively, on 1st April, 2023, and their profit sharing ratio is 2 : 1. Interest on capital is agreed @ 12% p.a. Y is to be allowed an annual salary of ₹ 6,000. The profit for the year ending 31st March, 2024, amounted to ₹ 50,000. The manager is entitled to a commission of 10% of the profits.

Prepare Profit and Loss Appropriation Account and Capital Accounts.

A and B are partners in a firm sharing profits or losses in the ratio of 2 : 3 with capitals of ₹ 4,00,000 and ₹ 8,00,000 respectively, on 1st April, 2023. Each partner is entitled to 10% p.a. interest on his capital. B is entitled to a commission of 10% on net profit before charging any commission. A is entitled a commission of 8% of net profit after charging all commissions. Net profit for the year ended 31st March, 2024, was ₹ 4,80,000.

Prepare Profit and Loss Appropriation Account.

Y and Z are partners with capitals of ₹ 2,50,000 and ₹ 1,50,000, respectively, on 1st April, 2023. Each partner is entitled to 9% p.a. interest on his capital. Z is entitled to a salary of ₹ 60,000 p.a. together with a commission of 6% of Net Profit after charging his commission. Net profit for the year ended 31st March, 2024, amounts to ₹ 2,12,000.

Prepare Partner’s Capital Accounts:

1. When capitals are fixed.
2. When capitals are fluctuating.

Hint: When the profit-sharing ratio of the partners is not given in the question, the profits will be shared equally.

X and Y were partners in a firm sharing profits in the ratio of 2 : 1. On 1st April, 2025, their fixed capitals were ₹ 6,20,000 and ₹ 2,40,000, respectively. On 1st Nov., 2025, they decided that their total capital (fixed) should be ₹ 9,00,000 in their profit-sharing ratio. Accordingly, they introduced extra capital or withdrew excess capital.

The partnership deed provided for the following:

1. A monthly salary of ₹ 4,000 to X.
2. Interest on Capital @ 9% p.a.
3. Interest on drawing @ 12% p.a.

The drawings of X and Y during the year were as follows:

During the year ended 31.3.2026, the firm earned a net profit of ₹ 3,00,000. 20% of this profit was to be transferred to the general reserve.

You are required to prepare:

1. Profit and Loss Appropriation Account,
2. Capital Accounts of partners, and
3. Current Accounts of partners.

Hint: Interest on capital X ₹ 55,050 and Y ₹ 23,850. Interest on Drawings X ₹ 3,900 and Y ₹ 3,000.

A, B and C entered into a partnership on 1st April 2023 with capitals of ₹ 10,00,000, ₹ 8,00,000 and ₹ 5,00,000, respectively. On 1st July 2023, B advanced ₹ 2,00,000, and on 1st December 2023, C advanced ₹ 1,00,000 by way of loans to the firm. The Profit and Loss Account for the year ended 31.3.2024 disclosed a profit of ₹ 7,70,000, but the partners could not agree upon the rate of interest on loans and the profit-sharing ratio. Prepare partner’s Capital A/cs and Loan A/cs.

Hint: In the absence of agreement, interest on the loan is to be paid @ 6% p.a., and profit will be shared equally.

Lata and Mamta are partners with capitals of ₹ 3,00,000 and ₹ 2,00,000, respectively, sharing profits as Lata 70% and Mamta 30%. During the year ended 31st March 2024, they earned a profit of ₹ 2,54,800 before allowing interest on the partner’s loan. The terms of partnership are as follows:

1. Interest on capital is to be allowed @ 7% p.a.
2. Lata is to get a salary of ₹ 2,500 per month.
3. Interest on a loan by Mamta to the firm of ₹ 80,000 for the whole year.
4. Interest on drawings of partners at 8% per annum. Drawings being Lata at ₹ 50,000 and Mamta at ₹ 75,000.
5. 1/10th of the net profit should be transferred to the general reserve.

Prepare the Profit and Loss Appropriation Account.

Hint:

1. Interest on loans will be calculated at 6% p.a.
2. Interest on drawings will be calculated for an average period of 6 months.
3. Transfer to General Reserve will be 10% of net profit, i.e., 10% of 250,000 = ₹ 25,000.

A, B and C are partners sharing the profits and losses in the ratio of 2 : 3 : 5. On 1st July, 2023, A and B granted loans of ₹ 2,00,000 and ₹ 1,00,000, respectively, to the firm. Show the distribution of profits/losses for the year ended 31st March, 2024, in the following cases:

Case:

1. If the profits before interest for the year amounted to ₹ 7,500.
2. If the loss before interest for the year amounted to ₹ 7,500.

Raj, Mehak, and Divya were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Their respective capitals were ₹ 6,00,000, ₹ 4,00,000 and ₹ 2,00,000. The partnership deed provided for the following:

1. Interest on capital @ 8% per annum.
2. Interest on drawings @ 6% per annum.
3. Interest on the partner’s loan to the firm @ 5% per annum.

During the year, Raj had withdrawn ₹ 12,000 on 1st October, 2021, while Mehak withdrew ₹ 60,000 on 1st December, 2021.

On 1st January, 2022, Divya had given a loan of ₹ 1,20,000 to the firm.

Pass the necessary journal entries in the books of the firm for the following transactions for the year ended 31st March, 2022:

1. Allowing interest on Raj’s capital.
2. Charging interest on Mehak’s drawings.
3. Providing interest on a loan given to the firm by Divya.

Also pass transfer entries in the Profit and Loss Account/Profit and Loss Appropriation Account, as the case may be.

A, B and C are partners in a firm sharing profits and losses equally. On 1st April, 2023, their fixed capitals were ₹ 8,00,000, ₹ 6,00,000 and ₹ 6,00,000, respectively. On 1st October 2023, A advanced ₹ 1,00,000 to the firm, whereas C took a loan of ₹ 1,50,000 from the firm on the same date. It was agreed among the partners that C will pay interest @ 10% p.a.

Profit for the year ended 31st March, 2024, amounted to ₹ 4,20,000 before allowing or charging interest on loans. Pass journal entries for interest on loans and prepare current accounts of the partners.

Hint: Interest on A’s loan will not be credited to his current account. It will be credited to his loan A/c.

Hemant and Sameer are partners in a firm. On 1st December 2023, Hemant gave a loan to the firm of ₹ 5,00,000. On the same date, the firm gave a loan of ₹ 2,00,000 to Sameer. They do not have an agreement as to interest.

The firm earned a profit of ₹ 3,70,000 (before any interest) for the year ended 31st March, 2024. Pass journal entries for interest on loans and distribution of profit for the year ended 31st March, 2024.

Hints:

1. Interest on a loan by Hemant will be provided @ 6% p.a.
2. Interest on loan by Sameer will not be charged.

P and Q are partners sharing profits and losses in the ratio of 60 : 40. On 1st April, 2023, their capitals were P – ₹ 5,00,000 and Q – ₹ 3,00,000. During the year ended 31st March, 2024, they earned a profit of ₹ 5,76,000 before taking into account any of the following terms of partnership:

1. Interest on the capital is to be charged @ 8% p.a.
2. Q will get a salary of ₹ 10,000 per month.
3. Q will get a commission of 5% on net profits after charging his commission.
4. P is entitled to an annual rent of ₹ 2,40,000 for the use of his premises by the firm.

The partner’s drawings for the year were P – ₹ 40,000 and Q – ₹ 30,000. After considering the above factors, you are required to prepare the Profit and Loss Appropriation Account and the Capital Accounts of the Partners.

Hints:

1. Net Profit Credited to Profit and Loss Appropriation A/c: ₹ 5,76,000 - Rent ₹ 2,40,000 = ₹ 3,36,000
2. Q’s Commission `5/105` of ₹ 3,36,000.
3. Rent is credited to P’s Capital Account.

Parul and Rajul were partners in a firm, sharing profits and losses in the ratio of 5 : 3. The balance in their fixed capital accounts on 1^st April, 2023 were: Parul ₹ 6,00,000 and Rajul ₹ 8,00,000. The partnership deed provided for allowing interest on capital at 12% per annum. The net profit of the firm for the year ended 31^st March, 2024 was ₹ 1,26,000.

Prepare Profit and Loss Appropriation Account for the year ended 31^st March, 2024. Show your working clearly.

Rubika and Neha are partners in a firm sharing profits and losses in the ratio of 3 : 2. According to partnership deed:

(i) Rubika and Neha to get salary of ₹ 4,500 p.m. and ₹ 9,000 per quarter respectively.

(ii) Interest on capital: Rubika: ₹ 72,000

Neha: ₹ 36,000

(iii) Interest on drawings: Rubika: ₹ 2,500

Neha: ₹ 4,500

Rubika had advanced a loan of ₹ 2,00,000 to the firm on 1st April, 2025. The profit earned by the firm was ₹ 1,37,000 before considering the interest on Rubika’s loan.

Prepare Profit & Loss Appropriation Account for the year ended 31st March 2026.

Akruti and Vibhuti were partners in a firm sharing profits in the ratio 2 : 1. The balances in their capital and current accounts as on 1st April, 2023 were as under:

The partnership deed provided that Akruti was to be paid a salary of ₹ 22,500 per quarter, whereas Vibhuti was to get a commission of 15% on net profit before charging such commission.

Interest on capital was to be allowed @ 6% p.a. whereas interest on drawings was to be charged @ 10% p.a. The drawings of Akruti were ₹ 40,000 drawn on 1st July 2023, and Vibhuti withdrew ₹ 30,000 on 1st Dec., 2023. The net profit of the firm for the year ended 31st March 2024 before making the above adjustments was ₹ 1,00,000.

Prepare a profit and loss appropriation account and partner’s current accounts.

Hint: Available profit is ₹ 1,04,000. Since it is less than appropriations, it will be divided in the ratio of 1,08,000 : 27,000 i.e., 4 : 1.

Mr. Ashok Gupta is a partner in a firm. He withdrew the following amounts during the year ended 31st March, 2025:

Calculate interest on drawings @ 9% p.a. for the year ended on 31st March, 2025.

A is a partner in a firm. During the year ended 31st March, 2025, A’s drawings were:

Interest on drawings is charged @ 10% per annum. Calculate interest on drawings of A for the year ended 31st March, 2025.

As per the partnership deed, interest on drawings is to be charged @ 7% p.a. Sohan, a partner of the firm, withdrew the following amounts during the year ended 31st March, 2024:

What will be the amount of interest on Sohan’s drawings?

Gopal is a partner in a firm. He withdrew ₹ 1,000 p.m. regularly on the first day of every month during the year ended 31st March, 2025, for personal expenses. If interest on drawings is charged @ 15% p.a., calculate the interest on the drawings of Gopal.

X, Y and Z are partners in a firm. You are informed that

1. X draws ₹ 4,000 from the firm at the beginning of every month,
2. Y draws ₹ 4,000 from the firm at the end of every month, and
3. Z draws ₹ 4,000 from the firm in the middle of every month.

Interest on drawings is to be charged @ 9% p.a. Calculate interest on partner’s drawings.

Calculate the interest on drawings of Mr. Aditya @ 8% p.a. for the year ended 31st March, 2025, in each of the following alternative cases:

Case:

1. If he withdrew ₹ 5,000 in the beginning of each quarter.
2. If he withdrew ₹ 6,000 at the end of each quarter.
3. If he withdrew ₹ 10,000 during the middle of each quarter.

Calculate the interest on drawings of Sh. Ganesh @ 9% p.a. for the year ended 31st March, 2024, in each of the following alternative cases:

Case:

1. If he withdrew ₹ 4,000 p.m. in the beginning of every month;
2. If he withdrew ₹ 5,000 p.m. at the end of every month;
3. If he withdrew ₹ 6,000 p.m;
4. If he withdrew ₹ 72,000 during the year;
5. If he withdrew as follows:
   

   	₹
   30th April, 2023	10,000
   1st July, 2023	15,000
   1st Oct., 2023	18,000
   30th Nov., 2023	12,000
   31st March, 2024	20,000

6. If he withdrew ₹ 12,000 in the beginning of each quarter;
7. If he withdrew ₹ 18,000 at the end of each quarter;
8. If he withdrew ₹ 18,000 during the middle of each quarter.

Gupta is a partner in a firm. He regularly drew ₹ 800 at the beginning of every month for the six months ending 31st March, 2024. Calculate interest on drawings at 15% p.a.

Gupta is a partner in a firm. He regularly drew ₹ 800 at the end of every month for the six months ending 31st March, 2024. Calculate interest on drawings at 15% p.a.

A, B and C are partners in a firm. For six months ending 31st March, 2024:

A drew regularly ₹ 15,000 in the beginning of every month. B drew regularly ₹ 20,000 at the end of every month, and C drew regularly ₹ 25,000 in the middle of every month.

Calculate interest on drawings @ 10% p.a. for six months ending 31st March, 2024.

Gargi withdrew ₹ 15,000 p.m. for six months ended 30th September, 2024. Calculate interest on drawings @ 8% p.a. in the following cases for the year ended 31st March, 2025.

1. When she withdrew the amount in the beginning of every month.
2. When she withdrew the amount in the middle of every month.
3. When she withdrew the amount at the end of every month.

Calculate the amount of Era’s monthly drawings for the year ended 31st March, 2023, in the following cases when interest is charged on drawings @ 10% p.a.

1. When she withdrew a fixed amount at the beginning of each month, and interest on drawings is ₹ 5,200.
2. When she withdrew a fixed amount at the end of each month and interest on drawings is ₹ 6,600.

Sneha is a partner in a firm. Calculate the amount of Sneha’s quarterly drawings for the year ended 31st March, 2023, in the following cases when interest is charged @ 10% p.a.

1. When she withdrew a fixed amount in the beginning of each quarter and interest on drawings is ₹ 3,750.
2. When she withdrew a fixed amount at the end of each quarter and interest on drawings is ₹ 3,000.

Anamika and Monika are partners in a firm. Anamika withdrew ₹ 25,000 at the end of each month, and interest on drawings was calculated at ₹ 8,250 at the end of the year. What is the rate of interest on drawings?

Shruti and Gayatri are partners in a firm. Shruti withdrew ₹ 60,000 at the end of each quarter, and interest on drawings was calculated to be ₹ 6,300 at the end of the year. What is the rate of interest on drawings?

Partner A withdrew ₹ 70,000 in the middle of each half year. Calculate the rate of interest on drawings if the amount of interest charged at the end of the year was ₹ 8,400.

Ascertain the amount of each drawing made by B, during the year ending 31st March, 2026, if he withdrew a fixed amount at the beginning of every alternate month starting from 1st April, 2025. The interest on drawings was ₹ 4,725 charged @ 9% p.a.

Vishu, Rahul and Kirti are partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Their capitals on 1st April, 2025, were:

The terms of the partnership deed are as follows:

Interest on Drawings (except on commission withdrawn) @ 6% p.a.

Interest on Capital @ 10% p.a.

Rahul and Kirti are allowed a commission of 5% (each) on Net Profit, after charging such commission.

The drawings of the partners were:

• Vishu withdrew ₹ 3,000 p.m. at the end of each month starting from 31st August, 2025.
• Kirti withdrew @ 48,000 during the year (including her commission).
• Rahul had withdrawn at the beginning of every month a certain fixed amount on which he was charged interest of ₹ 1,365.

Net profit for the year ended 31st March, 2026, amounted to ₹ 1,65,000 before taking into account the above adjustments.

1. Find out about the drawings made by Rahul every month.
2. Pass the journal entries for commission.
3. Prepare the Profit and Loss Appropriation A/c.

Hints:

i. Interest on Vishu’s drawings will be charged for 3.5 months.

ii. Entries for commission:

Basu, Harish and Jadav are partners in a firm with capital contributions of ₹ 50,000, ₹ 40,000 and ₹ 30,000, respectively.

Their partnership agreement provides for the following:

1. Interest on capitals to be allowed @ 10% p.a.
2. Interest on drawings to be charged @ 10% p.a.
3. Harish and Jadav are each to be paid salaries @ ₹ 500 per month.
4. Basu is to be paid a commission of 5% of the net profit.
5. 10% of the net profit be carried to a reserve account.
6. The remaining profits are to be divided as follows:
   40% to Basu; 30% to Harish; 30% to Jadav.

The net profit for the year ended 31.12.2008 was ₹ 50,000. Basu withdrew ₹ 1,000 per month at the beginning of each month, Harish withdrew ₹ 1,000 per month in the middle of each month and Jadav withdrew ₹ 1,000 per month at the end of each month.

You are required to prepare the Profit and Loss Appropriation Account for the year ended 31.12.2008 only.

Hint: Interest on drawings: Basu ₹ 650; Barish ₹ 600 and Jadav ₹ 550.

A and B entered into a partnership on 1st April, 2024, with capitals of ₹ 8,00,000 and ₹ 6,00,000, respectively. The profit is to be shared in the ratio of 5 : 3 by both the partners. The partnership deed provides the following information:

1. A is to receive rent of ₹ 45,000 per annum for the use of his premises by the firm.
2. Both the partners are to be allowed interest on capitals @ 11 % p.a. and are to be charged interest on drawings @ 9% p.a.
3. The manager is to be allowed a commission @ 12% of the net profit after charging such commission.

During the year, A withdrew ₹ 5,000 at the end of every month; B’s drawings during the year were as follows:

The profit earned by the firm for the year ended 31st March, 2025 was ₹ 4,36,457 (before providing for any of the above clauses).

From the above you are required to draft only the Profit and Loss Appropriation Account for the year ended 31st March, 2025.

Swaraj, Viraj, and Maharaj are equal partners; their balances in the fixed capital accounts for the year ended 31st March, 2025, were ₹ 1,80,000, ₹ 1,60,000, and ₹ 1,75,000, respectively.

The balances in their current accounts were as follows:

The details of each partner’s drawings during the year 2024-25 are as follows:

The partnership deed further provides that:

1. Partners are to be allowed interest on capital A/c balances @ 6% p.a. and that on current A/c balances @ 5% p.a.
2. Partners are charged interest on drawings @ 5% p.a.
3. Maharaj is to be given a salary of ₹ 20,000 for the year.
4. Swaraj is entitled to a commission of 10% of the corrected net profit of the firm.
5. Viraj is entitled to a commission of 10% of the corrected net profit of the firm after charging such commission.

During the year ended 31st March, 2025, the net profit of the firm was ₹ 2,00,000 after deducting Maharaj’s salary, which had been debited to salaries A/c.

You are required to prepare the Profit and Loss Appropriation Account of the firm.

X and Y are partners sharing the profits and losses in the ratio of 2 : 1 with capitals of ₹ 50,000 and ₹ 30,000, respectively. Show the distribution of profits in each of the following alternative cases:

1. If the partnership deed is silent as to the interest on capital and the profits for the year are ₹ 9,000.
2. If the partnership deed provides for interest on capital @ 6% p.a. and the losses for the year are ₹ 6,000.
3. If the partnership deed provides for interest on capital @ 6% p.a. and the profits for the year are ₹ 9,000.
4. If the partnership deed provides for interest on capital @ 6% p.a. and the profits for the year are ₹ 3,000.
5. If the partnership deed provides for interest on capital @ 6% p.a., even if it involves the firm in loss and the profits for the year are ₹ 3,000.

A and B contribute ₹ 4,00,000 and ₹ 3,00,000, respectively, as their capitals. They decide to allow interest on capital @ 8% p.a. Their respective share of profit is 3 : 2 and the profit for the year is ₹ 42,000 before allowing for interest on capital. Show the distribution of profits:

1. Where there is no agreement except for interest on capital and
2. Where there is a clear agreement that the interest on capital will be allowed even if it involves the firm in loss.

Kavita and Leela are partners with capitals of ₹ 6,00,000 and ₹ 4,00,000 and sharing profits and losses in the ratio of 2 : 1. Their partnership deed provides that interest on capital shall be provided @ 8% p.a., and it is to be treated as a charge against profits. Prepare relevant accounts to allocate the profit in the following alternative cases:

1. If profit for the year is ₹ 1,10,000.
2. If profit for the year is ₹ 35,000.
3. If loss for the year is ₹ 10,000.

Hint: Interest on capital will be recorded in the profit and loss account since it is a charge against profits.

Lalan and Balan were partners in a firm sharing profits in the ratio of 3 : 2. Their fixed capitals on 1st April, 2023, were Lalan, ₹ 1,00,000 and Balan, ₹ 2,00,000. They agreed to allow interest on capital @ 12% per annum and to charge on drawings @ 15% per annum. The firm earned a profit, before all the above adjustments, of ₹ 30,000 for the year ended 31st March, 2024. The drawings of Lalan and Balan during the year were ₹ 3,000 and ₹ 5,000, respectively. Showing you calculations clearly, prepare a Profit and Loss Appropriation Account of Lalan and Balan. The interest on capital will be allowed even if the firm incurs a loss.

A, B and C are in partnership sharing profits and losses in the ratio of 2 : 1 : 1. The following particulars are available from their books:

Life insurance premium of A has been paid by the firm and has been charged to General Expenses A/c. Partners are allowed 8% p.a. interest on their capital and charged at 10% p.a. on their drawings. Profits for the year ending 31st March, 2022, amounted to ₹ 20,800 before taking into account the interest on capital and drawings. While calculating profits, depreciation at the rate of 20% p.a. has been omitted on a building of the value of ₹ 20,000. Prepare a profit and loss appropriation account and partner’s current accounts for the year.

Hints:

1. If it is not clearly mentioned whether the balance of a current account is debit or credit, it will be presumed that its balance is credit.
2. Interest on drawings will be calculated for six months.

After the accounts of the partnership have been drawn up and the books closed off, it is discovered that interest on capitals @ 8% p.a., as provided in the partnership agreement, has been omitted to be recorded. Their capital accounts at the beginning of the year stood as follows: A ₹ 8,00,000; B ₹ 4,00,000; C ₹ 3,00,000. Their profit-sharing ratio was 2 : 1 : 1. Instead of altering the balance sheet, it is decided to pass the necessary adjusting entry at the beginning of the next year.

You are required to give the necessary journal entry.

A, B, C and D are partners sharing profits in 2 : 2 : 1 : 1. They distributed the profit for the year ending 31st March 2024, ₹ 9,00,000, without providing for the following:

1. Salary to A @ 15,000 per month.
2. Salary to B and D @ ₹ 30,000 per quarter to each partner.

Give the necessary adjusting journal entry.

A, B, and C are partners sharing profits and losses in the ratio of 1 : 2 : 3. They have omitted interest on capital @ 8% p.a. for two years ended 31st March, 2024. Their fixed capitals were ₹ 4,00,000, ₹ 6,00,000 and ₹ 8,00,000, respectively. Pass the necessary adjusting entry.

Asha, Suman and Verka were partners in a firm; their capitals were ₹ 9,00,000, ₹ 7,00,000 and ₹ 4,00,000, respectively, as of 1st April 2022. Net profit for the year ended 31st March 2023 was ₹ 1,20,000, which was distributed without providing for interest on capital @ 8% p.a. as per the partnership deed.

Pass the necessary adjustment entry.

Hint: Interest on capital is in excess of net profit.

A, B, C, and D are partners sharing profits and losses in 2 : 2 : 3 : 3 respectively. After the accounts of the year had been closed, it was found that interest on drawings @ 6% p.a. has not been taken into consideration. The drawings of the partners were A ₹ 20,000, B ₹ 24,000, C ₹ 32,000, and D ₹ 44,000. Give the necessary adjusting entry.

A and B were partners sharing profits in 2 : 1 ratio. During the year ended 31st March, 2024, A’s drawings were ₹ 50,000 per month, drawn in the beginning of every month, and B’s drawings were ₹ 25,000 per month, drawn at the end of every month. After the preparation of final accounts, it was discovered that interest on A’s drawings @ 12% p.a. was not taken into consideration. Give the necessary adjusting entry on 1st April, 2024.

Anil, Sunil, and Sanjay have omitted interest on capital for the two years ended on 31st March, 2024. Their fixed capitals in two years were Anil ₹ 8,00,000, Sunil ₹ 7,00,000, and Sanjay ₹ 3,00,000. The rate of interest on capital is 10% p.a. Their profit sharing ratios were in the first year 4 : 3 : 2 and in the second year 3 : 2 : 1.

Give the necessary adjusting entry at the beginning of next year.

On 1st April, 2023, the capitals of A and B were ₹ 4,00,000 and ₹ 2,00,000, respectively. They divided profits in their capital ratio. Profits for the year ended 31st March, 2024, were ₹ 3,00,000, which have been duly distributed among the partners, but the following transactions were not passed through the books:

1. Interest on capitals @ 12% p.a.
2. Interest on drawings A ₹ 12,000; B ₹ 10,000.
3. Commission due to B ₹ 20,000 on a special transaction.
4. A is to be paid a salary of ₹ 50,000.

You are required to pass a journal entry on 10th April, 2024, which will not affect the profit and loss account of the firm and at the same time will rectify the errors.

Kumar and Raja were partners in a firm sharing profits in the ratio of 7 : 3. Their fixed capitals were: Kumar ₹ 9,00,000 and Raja ₹ 4,00,000. The partnership deed provided for the following, but the profit for the year was distributed without providing for:

1. Interest on capital @ 9% per annum.
2. Kumar’s salary ₹ 50,000 per year and Raja’s salary ₹ 3,000 per month.

The profit for the year ended 31.3.2024 was ₹ 2,78,000.

Pass the adjustment entry.

A, B and C are partners sharing profits in the ratio of 2 : 2 : 1. Their fixed capitals were ₹ 4,00,000, ₹ 2,50,000 and ₹ 1,00,000, respectively. Net profit for the year ending 31st March, 2022, amounted to ₹ 2,20,000 which was distributed without providing for the following:

1. Salary to B ₹ 5,000 p.m. and to C ₹ 10,000 per quarter.
2. Interest on capital @ 6% p.a.
3. Commission to Manager @ 10% on net profit after charging such commission.

Pass the necessary rectifying entry.

A, B and C were partners in a firm. On 1-4-2023 their capitals stood at ₹ 5,00,000, ₹ 2,50,000 and ₹ 2,50,000, respectively. As per the provisions of the partnership deed:

1. C was entitled for a salary of ₹ 10,000 p.m.
2. Partners were entitled to interest on capital at 5% p.a.
3. Profits were to be shared in the ratios of capitals.

The net profit for the year ended 31.3.2024 of ₹ 3,30,000 was divided equally without providing for the above terms.

Pass an adjustment entry to rectify the above error.

A, B and C were partners in a firm. Their capitals were A ₹ 1,00,000, B ₹ 2,00,000 and C ₹ 3,00,000, respectively, on 1st April, 2023. According to the partnership deed, they were entitled to an interest on capital @ 5% p.a. In addition, A was also entitled to draw a salary of ₹ 5,000 per month. C was entitled to a commission of 5% on net profits. The net profits for the year ended 31st March, 2024, were ₹ 3,60,000, distributed in the ratio of their capitals without providing for any of the above adjustments. The profits were to be shared in the ratio 2 : 3 : 5. Pass the necessary adjustment entry showing the workings clearly.

X, Y and Z are partners in a firm sharing profits and losses in the ratio 5 : 3 : 2. Their capitals (fixed) are ₹ 2,00,000; ₹ 1,50,000; and ₹ 1,25,000, respectively. For the year ended 31st March, 2024, interest on capital was credited to them @ 8% instead of 10%.

Give the adjusting journal entry.

Showing your workings clearly, pass the necessary journal entry to rectify the error.

A, B, and C were partners sharing profits in the ratio of 1 : 2 : 3. A withdrew ₹ 5,000 every month, B withdrew ₹ 60,000 during the year and C withdrew ₹ 15,000 during each quarter. It was discovered that for the year ending 31st March 2024, interest on drawings was charged @ 8% p.a., whereas there is no provision for interest on drawings in the partnership deed. Pass the necessary rectifying entry.

Hint: Interest on each partner’s drawings is ₹ 2,400.

After the accounts of a partnership have been drawn up and the books closed off, it is discovered that for the years ended 31st March, 2023 and 2024, interest has been credited to the partners upon their capitals at 5% per annum, although no provision for interest is made in the partnership agreement.

The amounts involved are:

You are required to put through an adjusting entry as on 1st April, 2024, if the profits were shared as follows in 2023, 2 : 2 : 1, and in 2024, 3 : 4 : 3.

X, Y and Z are partners sharing profits and losses in the ratio of 1 : 2 : 1. The current account balances were:

X: ₹ 5,000

Y: ₹ 2,000 (Dr.)

Z: ₹ 2,000

Drawings made by X, Y and Z were ₹ 2,60,000, ₹ 1,00,000 and ₹ 1,40,000, respectively, during the year. After the closing of the financial year ended on 31st March, 2025, the following errors were noticed.

1. Interest on drawings @ 10% p.a. was not charged.
2. Commission payable to X and Z was as follows:
   X: 5% of Net Profit
   Z: 4.5% of Net Profit
   Net profit for the year was ₹ 2,00,000
3. Salary payable to Y ₹ 5,000 quarterly was not provided.

Prepare current accounts of partners after rectifying the lapses in accounting.

Sachin, Kapil and Rashmi have been sharing profits in the ratio of 3 : 2 : 1 respectively. Rashmi wants that she should share profits equally along with Sachin and Kapil, and she further wants that the change in profit-sharing ratio should be applicable retrospectively for the last three years. Other partners have no objection to this. The profits for the last three years were ₹ 60,000, ₹ 47,000 and ₹ 55,000. Record the adjustment by means of a journal entry.

Mohan, Vijay and Anil are partners; their capitals on 31st March 2024, after adjustments of drawings and profits, were ₹ 30,000, ₹ 25,000 and ₹ 20,000, respectively. Profits for the year ending 31st March 2024 were ₹ 24,000. Their drawings were ₹ 5,000 (Mohan), ₹ 4,000 (Vijay) and ₹ 3,000 (Anil) for the year ending 31st March, 2024. Subsequently, the following omissions were noticed, and it was decided to bring them into account.

1. Interest on capital at 10% p.a.
2. Interest on drawings: Mohan ₹ 250, Vijay ₹ 200 and Anil ₹ 150.

Make the necessary journal entry and prepare capital accounts of partners.

On 31st March, 2025, the balances in the capital accounts of Esha, Manav, and Daman after making adjustments for profits and drawings were ₹ 3,20,000, ₹ 2,40,000 and ₹ 1,60,000 respectively. Subsequently, it was discovered that the interest on capital and drawings had been omitted.

• The profit for the year ended on 31st March, 2025, was ₹ 90,000.
• During the year, Esha and Manav each withdrew a sum of ₹ 48,000 in equal instalments in the middle of every month and Daman withdrew ₹ 60,000.
• The interest on drawings was to be charged @ 5% per annum, and interest on capital was to be allowed @10% per annum.
• The profit-sharing ratio of the partners was 3 : 2 : 1.

Showing your workings clearly, pass the necessary rectifying entry.

The capital accounts of A, B and C showed credit balances of ₹ 5,00,000, ₹ 3,00,000 and ₹ 2,00,000, respectively, after taking into account drawings and a net profit of ₹ 3,00,000. They shared profits in the ratio of 2 : 1 : 1. The drawings of the partners during the year 2023-24 were:

1. A withdrew ₹ 10,000 at the beginning of each half year.
2. B withdrew ₹ 10,000 at the end of each half year.
3. C’s Drawings were:
   

   	₹
   1st May, 2023	6,000
   1st October, 2023	5,000
   31st Dec. 2023	4,000
   31st March, 2024	5,000

Calculate interest on partners’ capitals @ 8% p.a. and interest on partners’ drawings @ 10% p.a. for the year ended 31st March, 2024.

A and B are partners in a firm sharing profits and losses in the ratio of 2 : 1. The following was the balance sheet of the firm as at 31.3.2024.

The profits of ₹ 4,50,000 for the year ended 31.3.2024 were divided between the partners without allowing interest on capital @ 9% p.a. and without charging interest on drawings @ 12% p.a. During the year A withdrew ₹ 1,00,000 and B ₹ 50,000.

Pass the necessary adjustment journal entry and show your working clearly.

Hint: Interest on drawings will be charged for 6 months.

A and B are partners in a firm sharing profits and losses in the ratio of 2 : 3. The following was the balance sheet of the firm as at 31.3.2024.

Profits ₹ 2,00,000 for the year ended 31.3.2024 were divided between the partners without allowing interest on capital @ 6% p.a., interest on drawings @ 10% p.a. and salary to B @ ₹ 5,000 per month. During the year A withdrew ₹ 40,000 and B withdrew ₹ 20,000.

Showing your working notes clearly, pass the necessary rectifying entry.

A and B are partners sharing profits and losses in the ratio of 3 : 1. Following is the balance sheet of the firm as of 31st March, 2024.

Profit for the year ended 31st March, 2024 ₹ 24,000, was divided between the partners in their profit-sharing ratio, but interest on capital at 5% p.a. and on drawings at 6% p.a. was inadvertently ignored. Give the necessary adjustment entry for the adjustment of interest. Interest on drawings may be calculated on an average basis for 6 months.

From the following balance sheet of A and B, calculate interest on capital at 5% p.a. for the year ending 31st March, 2024:

Profit during the year ended 31st March, 2024, was ₹ 70,000. A and B share profits in the ratio of 2 : 1. Drawings during the year ended 31st March, 2024, were A ₹ 16,000 and B ₹ 20,000.

The capital accounts of P, Q and R stood at ₹ 200,000, ₹ 1,50,000 and ₹ 1,00,000, respectively, after the necessary adjustments in respect of drawings and net profit for the year ended 31st March, 2024. It was subsequently ascertained that interest on capital @ 10% p.a. was not taken into account while arriving at the divisible profits for the year.

Drawings during the year 2023-24 had been P ₹ 5,000 per month, Q ₹ 15,000 quarterly and R ₹ 30,000.

The net profit for the year amounted to ₹ 1,80,000 and partners shared profits and losses in the ratio of 2 : 2 : 1. You are required to pass the necessary journal entries to rectify the lapse in accounting.

Hints:

1. Entry will be passed for withdrawing the profit of ₹ 1,80,000 already distributed among the partners.
2. Entries will be passed for interest on capital of ₹ 42,000.
3. Entry will be passed for distributing the corrected net profit of ₹ 1,38,000 among the partners.

On 31st March, 2024, the balances in the capital accounts of A, B and C after making adjustments for profits and drawings were ₹ 3,20,000, ₹ 2,40,000 and ₹ 1,60,000, respectively. Subsequently, it was discovered that the interest on capital and drawings had been omitted.

• The profit for the year ended on 31st March, 2024, was ₹ 90,000.
• During the year, A and B each withdrew a sum of ₹ 48,000 in equal instalments in the middle of every month, and C withdrew ₹ 60,000.
• The interest on drawings was to be charged @ 5% per annum, and interest on capital was to be allowed @ 10% per annum.
• The profit-sharing ratio of the partners was 3 : 2 : 1.

You are required to:

1. Pass the necessary journal entries to rectify the lapse in accounting.
2. Prepare the adjusted capital accounts of partners.

Hints:

1. Entry will be passed for withdrawing the profit of ₹ 90,000 already distributed among the partners.
2. Entries will be passed for interest on capital ₹ 78,600 and interest on drawings ₹ 3,900.
3. Entry will be passed for distributing the corrected net profit of ₹ 15,300 among the partners.

A, B, C and D are partners in a firm. Their respective capitals were ₹ 4,00,000, ₹ 3,00,000, ₹ 2,00,000 and ₹ 1,00,000. The firm earned a profit of ₹ 2,50,000 for the year ended 31st March 2022. Profits were distributed in the ratio of their capitals, without providing for the following provisions of the partnership deed:

1. A’s guarantee to the firm that the firm would earn a profit of at least ₹ 3,00,000. Any shortfall in the firm's profits would be personally met by him.
2. Profits are to be shared equally.

You are required to pass the necessary journal entries to rectify the error.

Hint: Separate adjusting entries are to be passed.

A, B and C are partners in a firm. Their profit-sharing ratio is 3 : 2 : 1. However, C is guaranteed a minimum amount of ₹ 10,000 as a share of profits every year. Any deficiency arising on that account shall be met by A. The profits for the two years ending 31st March, 2021 and 2022, were ₹ 30,000 and ₹ 90,000, respectively.

Prepare Profit and Loss Appropriation Account for the two years.

X, Y and Z are partners with capitals of ₹ 4,00,000, ₹ 3,00,000 and ₹ 2,00,000, respectively. They charge 8% p.a. interest on their capitals and divide the profits in the ratio of 3 : 2 : 1. X has guaranteed that Z’s share shall not amount to less than ₹ 50,000 in any one year.

Their drawings during the year were ₹ 50,000, ₹ 40,000, and ₹ 35,000, respectively. Net profits for the year before providing interest on capitals was ₹ 2,52,000. Prepare Profit and Loss Appropriation A/c and capital accounts.

S, T, W and X are partners sharing profits in the ratio of 4 : 3 : 2 : 1. X is given a guarantee that his share of profits in any given year would be ₹ 80,000. Deficiency, if any, would be borne by other partners equally. The profits for the year ended 31st March, 2026, amounted to ₹ 6,50,000. Pass necessary entries in the books of the firm.

A, B and C were partners sharing profits and losses in the ratio of 3 : 2 : 1. Their capitals on 1st April, 2023, were A ₹ 500,000, B ₹ 3,00,000 and C ₹ 2,00,000.

A had personally guaranteed that in any year C’s share of profit after allowing interest on capital to all partners @ 8% p.a. and charging interest on drawings @ 10% p.a. will not be less than ₹ 1,00,000.

The net profit for the year ended 31st March, 2024, before allowing or charging any interest, amounted to ₹ 4,32,000.

• A has withdrawn ₹ 5,000 at the end of every month.
• B has withdrawn ₹ 15,000 at the end of every quarter.
• C has withdrawn ₹ 60,000 during the year.

Prepare the Profit and Loss Appropriation Account for the year 2023-24.

The partners of a firm distributed the profits for the year ended 31st March, 2024, ₹ 1,50,000 in the ratio of 2 : 2 : 1 without providing for the following adjustments:

1. A and B were entitled to a salary of ₹ 1,500 per quarter.
2. C was entitled to a commission of ₹ 18,000.
3. A and C had guaranteed a minimum profit of ₹ 50,000 p.a. to B.
4. Profits were to be shared in the ratio of 3 : 3 : 2.

Pass the necessary journal entry for the above adjustments in the books of the firm.

You are required to pass a single adjustment entry to rectify the error (show workings clearly).

X and Y were sharing profits in the ratio of 2 : 1. On 1st April, 2023, they admitted Z for `1/4`th share in the profits. Z is guaranteed a minimum profit of ₹ 1,00,000 for the year. Any deficiency in Z’s share is to be borne by X and Y in the ratio of 3 : 2. Losses for the year ending 31st March, 2024, amounted to ₹ 1,20,000. Record necessary entries.

A, B, and C are partners sharing profits in the ratio of 4 : 3 : 2. It was provided that B’s share of profit will not be less than ₹ 1,50,000 per annum. The losses for the year ended 31st March, 2024, were ₹ 85,000 before allowing interest on a loan of ₹ 1,00,000 taken from A on 1st June, 2023.

You are required to show the necessary account for the division of loss and pass the necessary journal entries.

Ali, Bimal and Deepak are partners in a firm. On 1st April, 2023 their capital accounts stood at ₹ 4,00,000, ₹ 3,00,000 and ₹ 2,00,000 respectively. They shared profits and losses in the proportion of 5 : 3 : 2. Partners are entitled to interest on capital @ 10% per annum and a salary to Bimal and Deepak @ ₹ 2,000 per month and ₹ 3,000 per quarter, respectively, as per the provisions of the partnership deed.

Bimal’s share of profit (excluding interest on capital but including salary) is guaranteed at a minimum of ₹ 50,000 p.a. Any deficiency arising on that account shall be met by Deepak. The profits of the firm for the year ended 31st March, 2024, amounted to ₹ 2,00,000. Prepare Profit and Loss Appropriation Account for the year ended on 31st March, 2024.

A, B, and C entered into a partnership on 1st April, 2025 with capitals of ₹ 8,00,000, ₹ 5,00,000 and ₹ 4,00,000 respectively. Each partner is entitled to interest on his capital @ 8% p.a. and charged Interest on Drawings @ 9% p.a.

B is entitled to a salary of ₹ 80,000 p.a. and Ca salary of ₹ 60,000 p.a. They decided to share profits and losses in the ratio of 5 : 3 : 2.

A guaranteed that the firm would earn a profit of ₹ 6,00,000 before allowing interest on capitals and partners’ salaries. The actual profit for the year ending 31st March, 2026 before interest and salaries amounted to ₹ 5,60,000.

A withdrew ₹ 35,000 in the middle of each half year. B withdrew ₹ 20,000 per month from 1st September, 2025, in the beginning of every month.

C has drawn ₹ 15,000 at the end of each alternate month starting from 30th April, 2025.

Pass necessary Journal Entries to record the above transactions on 31st March, 2026.

Hint: Interest on Drawings : A ₹ 3,150; B ₹ 4,200; C ₹ 4,050.

Ravi and Tiku are partners in a firm. According to their partnership deed:

1. Interest on capital will be allowed @ 5% per annum.
2. Interest on drawings will be charged @ 4% per annum.
3. Each partner will be given a salary of ₹ 1,000 per month.
4. Partners will share profits and losses in the ratio of 2 : 1.

Following are the particulars of the capitals and drawings of the partners:

Ravi had taken a loan of ₹ 10,000 from the firm, on which interest of ₹ 200 was due by him to the firm.

The accounts for the year 2017-18 showed that the firm had made a profit of ₹ 77,000 before taking into account any interest, partner’s salaries and the manager’s salary of ₹ 18,000.

You are required to prepare:

1. Profit and Loss Appropriation Account for the year 2017-18.
2. Partner’s Capital Accounts.

Hints:

1. Net profit as per Profit and Loss A/c ₹ 59,200 (i.e., ₹ 77,000 + ₹ 200 − ₹ 18,000).
2. Interest on the loan of ₹ 200 will also be debited to Ravi’s Capital A/c.

Asif and Ravi are partners in a firm, sharing profits and losses in the ratio of 3 : 2. Their fixed capitals as on 1st April, 2016, were ₹ 6,00,000 and ₹ 4,00,000, respectively.

Their partnership deed provides for the following:

1. Partners are to be allowed interest on their capital @ 10% per annum.
2. They are to be charged interest on drawings @ 4% per annum.
3. Asif is entitled to a salary of ₹ 2,000 per month.
4. Ravi is entitled to a commission of 5% of the correct net profit of the firm before charging such commission.
5. Asif is entitled to a rent of ₹ 3,000 per month for the use of his premises by the firm.

The net profit of the firm for the year ended 31st March, 2017, before providing for any of the above clauses was ₹ 4,00,000.

Both partners withdrew ₹ 5,000 at the beginning of every month for the entire year.

You are required to prepare a Profit and Loss Appropriation Account for the year ended 31^st March, 2017.

Hint: Commission 5% on ₹ 3,64,000 = ₹ 18,200.

Shankar and Manu are partners in a firm. On 1st April, 2014, their fixed capital accounts showed a balance of ₹ 2,00,000 and ₹ 4,00,000 respectively.

On this date, their current account balances were ₹ 50,000 and ₹ 1,00,000 respectively.

On 1st January, 2015, Shankar introduced additional capital of ₹ 2,00,000 while Manu gave a loan of ₹ 1,50,000 to the firm.

The clauses of their partnership deed provided for:

1. Interest on capital is to be allowed at the rate of 10% per annum.
2. Interest on drawings to be charged at the rate of 12% per annum.
3. Profits to be shared by them in the ratio of 3 : 2.
4. 10% of the correct net profit to be transferred to the General Reserve.

During the financial year 2014-15, both partners withdrew ₹ 6,000 each at the beginning of every quarter.

The net profit of the firm, before any interest, for the financial year 2014-15 was ₹ 5,00,000.

You are required to prepare for the year 2014-15:

1. Profit and Loss Appropriation Account.
2. Partner’s Fixed Capital Accounts.
3. Partner’s Current Accounts.
4. Partner’s Loan Account.

X, Y, and Z are in the partnership, and on 1st April, 2023, their respective capitals were ₹ 2,00,000, ₹ 1,20,000 and ₹ 1,00,000. Y is entitled to a salary of ₹ 25,000 and Z, ₹ 20,000 per annum, payable before division of profits. Interest is allowed on capital at 5% per annum but is not charged on drawings. Of the net divisible profits of the first ₹ 1,00,000; X is entitled to 40 percent, Y to 35 percent, and Z to 25 percent; over that amount, profits are shared equally. The profit for the year ended 31st March, 2024, after debiting partnership salaries but before charging interest on capital, was ₹ 1,81,000, and the partners had drawn ₹ 8,000 each. Prepare partner’s capital accounts for the year.

A and B are partners in a firm. A is to get a commission of 10% of net profit before charging any commission. B is to get a commission of 10% on net profit after charging all commissions. Net profit before charging any commission was ₹ 55,000. Find out the commission of A and B.

On 1st April, 2023 the balances of A and B were as follows:

On 1st July, 2023, A withdrew ₹ 20,000 from his capital, and B introduced ₹ 10,000 as further capital on the same date. According to the deed, interest on capitals is to be allowed at 8% p.a. but no interest is to be allowed or charged on current account balances and drawings. A is entitled to `3/5` and B `2/5` of the profit. The manager of the firm is entitled to a commission of 10% of the profit before any adjustment is made according to the deed. For the year ended 31st March, 2024, the profit was ₹ 40,000 and the drawings of A and B were ₹ 12,000 and ₹ 10,000 respectively. Prepare the Profit and Loss Appropriation A/c, Capital Accounts and Current Accounts.

Calculate the interest on drawings of Tarun @ 8% p.a. for the year ended 31st March 2024 in each of the following alternative cases:

Case (a) if his drawings during the year were ₹ 60,000;

Case (b) if he withdrew ₹ 5,000 p.m. in the beginning of every month;

Case (c) if he withdrew ₹ 5,000 p.m. at the end of every month;

Case (d) if he withdrew ₹ 5,000 p.m.;

Case (e) if he withdrew the following amounts as under:

2023: June 1 ₹ 10,000, Aug. 31 ₹ 12,000, Nov. 1, ₹ 16,000, Dec. 31 ₹ 13,000

2024: Feb. 1 ₹ 9,000

Determine the amount of Parnika’s quarterly drawings for the year ended 31st March, 2025 in the following cases where interest on drawings is charged @ 7% p.a.

1. When she withdrew a fixed amount in the beginning of each quarter and interest on drawings is ₹ 4,375.
2. When she withdrew a fixed amount at the end of each quarter and interest on drawings is ₹ 1,890.
3. When she withdrew a fixed amount during the middle of each quarter and interest on drawings is ₹ 3,150.

Find out the rate of interest on drawings in the following cases:

1. Saavi, a partner in a firm, withdrew ₹ 30,000 per quarter in the beginning of each quarter, and interest on drawings was calculated at ₹ 6,750 at the end of the year.
2. Asmi, a partner in a firm, withdrew ₹ 15,000 at the end of each month, and interest on drawings was calculated at ₹ 6,600 at the end of the year.

A, B and C have Capitals of ₹ 60,000, ₹ 30,000 and ₹ 20,000, respectively, on 1st April, 2023, on which they are entitled to interest @ 6% p.a. They share profits in the ratio of 5 : 3 : 2. A is entitled to receive a salary of ₹ 500 per month. Drawings during the year were as follows:

The rate of interest on drawings is 6% p.a. Profit for the year ended 31st March, 2024 was ₹ 24,605 before charging salary, interest on capital and drawings. Assuming that the capitals are (a) Fixed, (b) Floating, show the Partners’ Capital Accounts, Current Accounts and Profit and Loss Appropriation Account.

A, B and C are in partnership sharing profits and losses in the ratio of 2 : 1 : 1. It is agreed that interest on capital will be allowed @ 5 percent per annum, and interest on drawings will be charged @ 4 percent per annum. No interest will be allowed or charged on current accounts.

The following are the particulars of the capital, current and drawings accounts of the partners:

The draft accounts for the year ending 31.3.2024 showed a net profit of ₹ 1,20,000 before taking into account interest on capital and drawings and subject to the following rectification of errors:

1. Life insurance premium of A amounting to ₹ 1,500 paid by the firm on 31st March, 2024, has been charged to the miscellaneous expenditure account.
2. Repairs of machinery amounting to ₹ 20,000 has been debited to the plant account, and depreciation thereon charged @ 20 percent.
3. An item in the inventory was valued at ₹ 45,000 but was subsequently found to be worth ₹ 30,000 only.

You are required to prepare the Profit and Loss Appropriation Account for the year ended 31st March, 2024, and the Partner’s Current Accounts for the year.

X, Y and Z contribute ₹ 3,00,000, ₹ 2,00,000 and ₹ 1,00,000, respectively, by way of capital, on which they agree to allow interest at 12% p.a. They share profits and losses in the ratio of 5 : 3 : 2. Profit for the year ended 31st March 2022 is ₹ 60,000 before allowing interest on capitals. Prepare a Profit and Loss Appropriation Account if:

1. partnership deed is silent as to the treatment of interest as a charge or appropriation.
2. partnership deed provides for interest even if it involves the firm in loss.

Vinay, Usha, and Punit are partners in a firm. They have been sharing profits and losses in the ratio of 3 : 4 : 1.

Punit wants the profits to be shared equally amongst the partners. He further wants the change in the profit-sharing ratio to be applicable retrospectively for the last two years. Vinay and Usha have no objection to this.

The profits for the last two years were ₹ 70,000 and ₹ 50,000.

You are required to record the adjustment by means of a single journal entry.

Raja, Roopa, and Mala, sharing profits and losses equally, have fixed capitals of ₹ 12,00,000, ₹ 9,00,000, and ₹ 6,00,000, respectively. For the year ended 31st March, 2022, interest was credited to them @ 6% instead of 5% p.a. Give the adjusting entry.

P and Q were partners in a firm sharing profits in 7 : 3 ratio. Their fixed capitals were P ₹ 5,00,000 and Q ₹ 8,00,000. For the year ended 31st March, 2024, interest on capital was credited @ 12% instead of 10%. Show the necessary adjusting entry for the rectification of the error. Also show the working notes clearly.

A, B and C are partners. Their fixed capitals as on 31st March, 2024, were A ₹ 2,00,000, B ₹ 3,00,000 and C ₹ 4,00,000. Profits for the year ended 31st March, 2024, amounting to ₹ 1,80,000, were distributed. Give the necessary adjusting entry in each of the following alternative cases:

Case (a) Interest on capital was credited @ 8% p.a., though there was no such provision in the partnership deed.

Case (b) Interest on capital was not credited @ 8% p.a., though there was such a provision in the partnership deed.

Case (c) Interest on capital was credited @ 8% p.a. instead of 10% p.a.

Case (d) Interest on capital was credited @ 10% p.a. instead of 8% p.a.

E, F, and G were partners in a firm sharing profits in the ratio of 3 : 2 : 1. After the division of the profits for the year ended 31-3-2022, their capitals were E ₹ 2,95,000, F ₹ 3,30,000, and G ₹ 3,35,000. During the year, they withdrew ₹ 40,000 each. The profit of the year was ₹ 1,80,000. The partnership deed provided that interest on capital will be allowed @ 12% p.a. While preparing the final accounts, interest on partner’s capital was not allowed.

You are required to calculate the capital of E, F and G as of 1-4-2021 and pass the necessary adjustment entry for providing interest on capital. Show your workings clearly.

A, B and C were partners in a firm. On 1st April, 2025, their capitals stood as ₹ 5,00,000; ₹ 2,50,000 and ₹ 2,50,000 respectively. As per provisions of the partnership deed:

1. C was entitled for a salary of ₹ 5,000 per month.
2. A was entitled for a commission of ₹ 80,000 p.a.
3. Partners were entitled to interest on capital @ 6% p.a.
4. Partners will share profits in the ratio of capitals.

Net profit for the year ended 31.03.2026 was ₹ 3,00,000, which was distributed equally, without taking into consideration the above provisions. Showing your workings clearly, pass the necessary adjustment entry for the above.

John and Tanu were partners in a firm sharing profits and losses in the ratio of 1 : 2. The following was the Balance Sheet of the firm as at 31st March, 2024.

The profits of ₹ 2,40,000 for the year ended 31st March, 2024, were divided between partners without allowing interest on capitals @ 7% p.a. without charging interest on drawings @ 6% p.a.

The drawings of the partners were:

John: ₹ 12,500 per quarter at the beginning of each quarter.

Tanu: ₹ 7,500 p.m. at the end of every month.

Showing your workings clearly, pass the necessary adjustment entry in the books of the firm.

Peter, Max and Som were partners in a firm sharing profits and losses in the ratio of 4 : 2 : 1. Their fixed capitals were ₹ 40,000, ₹ 30,000 and ₹ 30,000, respectively.

Som was guaranteed a profit of ₹ 39,000 by the firm.

It was decided that any loss arising because of the guarantee would be shared by Peter and Max equally.

The net profit of the firm for the year ended 31st March, 2018, was ₹ 1,47,000.

You are required to prepare the Profit and Loss Appropriation Account for the year 2017-18, showing the distribution of profits.

A, B and C are partners sharing profits in the ratio of 5 : 4 : 1. C is given a guarantee that his share of profits in any year will not be less than ₹ 20,000. The profit for the year ending 31st March 2024 amounts to ₹ 1,40,000. Amount of shortfall in the profits given to C will be borne by A and B in the ratio of 3 : 2. Pass the necessary journal entry regarding the deficiency borne by A and B.

On 1st April, 2023, A, B and C started a business in partnership and contributed ₹ 1,00,000, ₹ 80,000 and ₹ 60,000, respectively, as their capitals. They agreed to share profits and losses in the ratio of 3 : 2 : 1 after allowing interest on capital @ 10% p.a. and charging interest on drawings @ 12% p.a. The drawings of the partners during the year ended 31st March, 2024, were A ₹ 12,000, B ₹ 15,000 and C ₹ 6,000.

C, to whom a salary of ₹ 1,000 p.m. was payable, had guaranteed that the firm would earn a profit of ₹ 75,000 before charging or allowing interest and salary payable to the partners. The actual profit before interest and salary amounted to ₹ 70,000.

Prepare the Profit and Loss Appropriation A/c and the Partner’s Capital Accounts.

Hint: Firm’s profit is ₹ 70,000 (i.e., ₹ 5,000 less than the amount guaranteed by C). As such, ₹ 5,000 will be debited to C’s Capital A/c and credited to Profit and Loss Appropriation  A/c.

Hill, Vale, and Dale are in partnership, sharing profits and losses in the ratio of 2 : 2 : 1 respectively. Interest is charged on Partner’s Drawings @ 6% p.a. and credited to Partner’s Capital Account Balances @ 6% p.a.

Vale is the firm’s Marketing Manager and for his specialised services, he is credited with a salary of ₹ 2,000 per quarter.

Drawing the year ended 31st March, 2024, the net profit of the firm was ₹ 62,000, and the partner’s drawings were:

In each case, the above drawings were made in two equal instalments on 30th September, 2023, and 31st March, 2024.

On 30th September, 2023, the firm agreed that Hill should withdraw ₹10,000 from his capital account and the Dale should subscribe a similar amount to his capital account.

The balances of the partner’s accounts on 1st April, 2023, were:

Transfer 5% of the net profit to the Reserve Fund of the firm.

Required:

1. Prepare the firm’s Profit and Loss Appropriation Account for the year ended 31st March, 2024.
2. Prepare the Partner’s Capital and Current Accounts for the year ended 31st March, 2024.

Anwar, Biswas, and Divya are partners in a firm. Their Capital Accounts stood at ₹ 8,00,000, ₹ 6,00,000 and ₹ 4,00,000, respectively, on 1st April, 2023. They shared profits and losses in the ratio of 3 : 2 : 1, respectively. Partners are entitled to interest on capital @ 6% per annum and a salary to Biswas and Divya @ ₹ 4,000 per month and ₹ 6,000 per quarter, respectively, as per the provisions of the Partnership Deed.

Biswas’s share of profit, including interest on capital but excluding salary, is guaranteed at a minimum of ₹ 82,000 p.a. Any deficiency arising on that account shall be met by Divya. Profit for the year ended 31st March, 2024, amounted to ₹ 3,12,000. Prepare a Profit and Loss Appropriation Account for the year ended 31st March, 2024.

Ankur, Bhavna and Disha are partners in a firm. On 1st April 2023, the balance in their capital accounts stood at ₹ 14,00,000, ₹ 6,00,000 and ₹ 4,00,000, respectively. They shared profits in the proportion of 7 : 3 : 2 respectively. Partners are entitled to interest on capital @ 6% per annum and a salary to Bhavna ₹ 50,000 p.a. and a commission of ₹ 3,000 per month to Disha as per the provisions of the Partnership Deed.

Bhavna’s share of profit (excluding interest on capital) is guaranteed at not less than ₹ 1,70,000 p.a. Disha’s share of profit (including interest on capital but excluding salary) is guaranteed at not less than ₹ 1,50,000 p.a. Any deficiency arising on that account shall be met by Ankur. The profits of the firm for the year ended 31st March, 2024, amounted to ₹ 9,50,000.

Prepare a ‘Profit and Loss Appropriation Account’ for the year ended 31st March, 2024.

Anshul, Navdeep and Rajni were partners of a Chartered Accountants firm with profit sharing ratio of 2 : 1 : 2. The provisions of the partnership deed were as follows:

1. Rent of ₹ 25,000 p.m. was to be given to Rajni.
2. A monthly salary of ₹ 30,000 p.m. to Anshul.
3. Navdeep was guaranteed a minimum profit of ₹ 4,00,000, and the deficiency arising because of the guarantee to Navdeep will be borne by Anshul and Rajni in the ratio of 12 : 7.
4. Anshul guaranteed that he will earn an annual fee of ₹ 3,00,000.

The net profit earned by the firm amounted to ₹ 20,00,000, and the fee earned by Anshul during the year ended 31st March, 2024, was ₹ 2,25,000.

Prepare the Profit and Loss Appropriation Account and the Capital Accounts of partners for the year ended 31st March, 2024.

Hint: Rent will be ignored since it must have been debited to Profit and Loss A/c.

Rudra and Dimple were partners in the firm. Rudra had given a guarantee that the firm will earn a minimum profit of ₹ 4,50,000 annually.

Rudra advanced a loan of ₹ 3,50,000 to the firm on 1st April, 2025, which was settled on 30th November, 2025.

Dimple took a loan of ₹ 1,00,000 from the firm on 1st January, 2026.

Manager of the firm, Raja is to be allowed a commission of 5% on net profit earned by the firm after charging his commission. Dimple was allowed a Rent of ₹ 7,000 per month for the office space provided by her to the firm alongwith a salary of ₹ 72,000 per Quarter.

The salary of Rudra was fixed at ₹ 16,000 per month.

The profit earned by the frim for the year ending 31st March, 2026 before considering any of the above provisions was ₹ 5,44,250.

Pass Journal Entries for the above mentioned transactions.

Saanvi and Jigyasu were partners sharing profits in the ratio of 3 : 2. The Current Account balances of partners on 1st April, 2025 were as follows:

The terms of their partnership agreement were as follows:

1. Partners are allowed or charged interest on their Current Account balances @ 6% per annum.
2. Interest on Drawings to be charged @ 7% p.a.
3. Commission @ 4% on net profit after charging such commission is to be allowed to Jigyasu.

Saanvi withdrew ₹ 10,000 per month at the beginning of each month for 1st 3 months and then increased it to ₹ 20,000 p.m.

Jigyasu withdrew ₹ 40,000 each three times during the year at an interval of 4 months between each drawing starting from 1st April, 2025.

Saanvi brought her personal car in the firm for business purposes on 1st August, 2025 at a valuation of ₹ 3,00,000, but this transaction was not recorded in the books. The firm has a policy of charging depreciation @ 20% p.a. on written down value method.

Rent account included ₹ 60,000 paid for Jigyasu's residential house on 1st January, 2026.

The firm earned a profit of ₹ 1,75,000 for the year ended 31st March 2026 before considering the above mentioned transactions.

You are required to:

1. Calculate correct Net Profit of the Firm for the year 2025-26.
2. Pass Journal Entries for appropriation of profit among the partners as per their agreement.

X, Y and Z are in partnership sharing profits and losses in 2 : 2 : 1 after allowing X, a salary of ₹ 4,00,000 p.a. On 1st April, 2025, their account balances were:

From 1st October, 2025, X decided to retire from the firm's full active work in the partnership. It is accordingly agreed that from 1st October, 2025:

1. X would transfer ₹ 2,00,000 from his Capital Account to a Loan Account on which interest would be paid @ 15% p.a.
2. X will not be entitled to any salary, but Y and Z are to receive a salary of ₹ 2,50,000 p.a. and ₹ 1,50,000 p.a. respectively. The net profit for the year ended 31st March, 2026 was ₹ 10,20,000.

No entry has been made in the books in regard to the following:

1. On 1st October, 2025, Z brought his private car into the firm at a valuation of ₹ 5,00,000. The car is to be depreciated over 4 years on the straight line basis. It is assumed that after 4 years it will have a residual value of ₹ 1,00,000.
2. 1/5th of the general expenses of ₹ 1,20,000, which have been debited to the Profit & Loss Account relate to the next accounting period.

Partners are entitled to interest on capital @ 12% p.a. and charged interest on drawings @ 9% p.a.

X withdrew ₹ 10,000 at the beginning of every month for first 6 months. Y withdrew ₹ 12,000 p.m. at the end of each month for first 3 months and then increased it to ₹ 15,000 per month.

You are required to prepare Profit & Loss Appropriation Account for the year ended 31st March, 2026. Also show their Capital and Current A/cs.

Following are essential elements of a partnership firm except:

Which of the following statement is true?

Sleeping partners are those who ______.

The relation of the partner with the firm is that of ______.

Number of partners in a partnership firm may be ______.

A, B, C and D are partners in a firm. What is the maximum number of additional members that can be admitted by them in the firm?

Liability of a partner is ______.

Which of the following statements are correct?

1. The liability of a partner for acts of the firm is unlimited.
2. Private assets of a partner can also be used for paying the debts of the firm.
3. Each partner is liable jointly with all other partners and also severally to the third parties for all the acts of the firm done, while he is a partner.
4. The liability of a partner is limited to the extent of his capital contribution.

A, B and C are in partnership business. A used ₹ 2,00,000 belonging to the firm without the information to other partners and made a profit of ₹ 35,000 by using this amount. Which decision should be taken by the firm to rectify this situation?

Which one of the following is not an essential feature of a partnership?

X, Y, and Z are partners sharing profits and losses equally. Their capital balances on March 31, 2024, are ₹ 80,000, ₹ 60,000, and ₹ 40,000, respectively. Their personal assets are worth as follows:

X – ₹ 20,000, Y – ₹ 15,000, and Z – ₹ 10,000

The extent of their liability in the firm would be:

Forming a partnership deed is ______.

Partnership deed is also called ______.

Which of the following is not incorporated in the Partnership Act?

When is the Partnership Act enforced?

On 1st January, 2023, Abhishek, a partner, advanced a loan of ₹ 3,00,000 to the firm. In the absence of a partnership agreement, the amount of interest on the loan for the year ending 31st March, 2023, will be ______.

A and B are partners in a partnership firm without any agreement. A has given a loan of ₹ 50,000 to the firm. At the end of the year, a loss was incurred in the business. Following interest may be paid to A by the firm:

A and B are partners in a partnership firm without any agreement. A has withdrawn ₹ 50,000 out of his capital as drawings. Interest on drawings may be charged from A by the firm:

A and B are partners in a partnership firm without any agreement. A devotes more time for the firm as compared to B. A will get the following commission in addition to profit in the firm’s profit:

In the absence of a partnership deed, the following rule will apply:

In the absence of an agreement, partners are entitled to:

1. Profit share in capital ratio. 
2. Commission for making an additional sale.
3. Interest on loans and advances by them to the firm.
4. Salary for working extra hours.
5. Interest on capital.

In the absence of agreement, partners are not entitled to ______.

Interest on capital will be paid to the partners if provided for in the partnership deed but only out of ______.

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

If any loan or advance is provided by a partner, then the balance of such loan account should be transferred to ______.

Interest on partner’s loan is credited to ______.

A partner introduced additional capital of ₹ 30,000 and advanced a loan of ₹ 40,000 to the firm at the beginning of the year. The partner will receive the year’s interest:

In the absence of a partnership deed, ______.

In the absence of express agreement, interest @ 6% p.a. is provided ______.

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

Is rent paid to a partner appropriation of profits?

Radhika, Mehar and Shubha were partners in a firm sharing profits and losses in the ratio of 9 : 8 : 7. If Radhika’s share of profit at the end of the year amounted to ₹ 5,40,000, Shubha’s share of profit will be:

P and Q were partners sharing profit and losses in the ratio of 2 : 1. Their capitals were ₹ 12,00,000 and ₹ 8,00,000, respectively. They were allowed interest on capital @ 6% p.a., and interest on drawings was to be charged @ 10% p.a. Their drawings during the year were P – ₹ 2,40,000 and Q – ₹ 1,60,000. Q’s share of net divisible profit as per the Profit and Loss Appropriation Account amounted to ₹ 1,60,000. Net profit of the firm before any appropriation was:

A and B were partners in a firm. Their capitals at the end of the year ending on 31.3.2021 were ₹ 3,00,000 and ₹ 1,50,000 respectively. During the year B withdrew ₹ 10,000, which was debited to his capital account. Profit for the year ended 31st March, 2021 was ₹ 32,000 which was credited to their capital accounts. During the year B introduced additional capital ₹ 32,000. What was B’s capital on 1.4.2020?

In a partnership firm, partner A is entitled to a monthly salary of ₹ 7,500. At the end of the year, the firm earned a profit of ₹ 75,000 after charging A’s salary. If the manager is entitled a commission of 10% on the net profit after charging his commission, the manager’s commission will be ______.

Which of the following statement is not true for fixed capital account?

Which of the following is true regarding salary to a partner when the firm maintains fluctuating capital accounts?

Ridhima and Kavita were partners, sharing profits and losses in the ratio of 3 : 2. Their fixed capitals were ₹ 1,50,000 and ₹ 2,00,000, respectively. The partnership deed provides for interest on capital @ 8% p.a. The net profit of the firm for the year ended 31^st March, 2023, amounted to ₹ 21,000. The amount of interest on capital credited to the current accounts of Ridhima and Kavita will be ______.

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.

Sara and Tara were partners in a firm. Their capitals as on 1st April, 2023 were ₹ 6,00,000 and ₹ 4,00,000 respectively. On 1st October, 2023, Tara withdrew ₹ 1,00,000 for personal use. According to the partnership deed, interest on capital was allowed @ 8% p.а.

The amount of interest allowed on Tara’s capital for the year ended 31st March, 2024 was:

X and Y are partners in the ratio of 3 : 2. Their capitals are ₹ 2,00,000 and ₹ 1,00,000 respectively. Interest on capitals is allowed @ 8% p.a. Firm earned a profit of ₹ 15,000 for the year ended 31st March 2024. As per the partnership agreement, interest on capital is treated as a charge on profits. Interest on capital will be ______.

X and Y are partners in the ratio of 3 : 2. Their capitals are ₹ 2,00,000 and ₹ 1,00,000 respectively. Interest on capitals is allowed @ 8% p.a. Firm earned a profit of ₹ 15,000 for the year ended 31st March 2024. As per the partnership agreement, interest on capital is treated as a charge on profits. Interest on capital will be ______.

A and B contribute ₹ 1,00,000 and ₹ 60,000, respectively, in a partnership firm by way of capital, on which they agree to allow interest @ 8% p.a. Their profit or loss sharing ratio is 3 : 2. The profit at the end of the year was ₹ 2,800 before allowing interest on capital. If there is a clear agreement that interest on capital will be paid even in case of loss, then B’s share will be:

Partners are supposed to pay interest on drawings only when ______ by the ______.

In a partnership firm, a partner withdrew ₹ 5,000 per month on the first day of every month during the year for personal expenses. If interest on drawings is charged @ 6% p.a., the interest charged will be ______.

Ajay is a partner in a firm. He withdrew ₹ 2,000 per month on the last day of every month during the year ended 31st March, 2024. If interest on drawings is charged @ 9% p.a., the interest charged will be ______.

Sushil is a partner in a firm. He withdrew ₹ 4,000 per month in the middle of every month during the year ended 31st March, 2024. If interest on drawings is charged @ 8% p.a., the interest charged will be ______.

Anuradha is a partner in a firm. She withdrew ₹ 6,000 in the beginning of each quarter during the year ended 31st March, 2024. Interest on her drawings @ 10% p.a. will be ______.

Bipasa is a partner in a firm. She withdrew ₹ 6,000 at the end of each quarter during the year ended 31st March, 2024. Interest on her drawings @ 10% p.a. will be ______.

Charulata is a partner in a firm. She withdrew ₹ 10,000 in each quarter during the year ended 31st March, 2024. Interest on her drawings @ 9% p.a. will be ______.

If an equal amount is withdrawn by a partner in the beginning of each month during a period of 6 months ending 31st March, 2024, interest on the total amount will be charged for ______ months.

If an equal amount is withdrawn by a partner in the end of each month during a period of 6 months ending 31st March, 2024, interest on the total amount will be charged for ______ months.

If an equal amount is withdrawn by a partner in each month during a period of 6 months ending 31st March, 2024, interest on the total amount will be charged for ______ months.

X is a partner in a firm. He withdrew regularly ₹ 1,000 at the beginning of every month for the six months ending 31st March, 2024. If interest on drawings is charged @ 8% p.a., the interest charged will be ______.

Y is a partner in a firm. He withdrew regularly ₹ 3,000 at the end of every month for the six months ending 31st March, 2024. If interest on drawings is charged @ 10% p.a. the interest charged will be ______.

Z is a partner in a firm. He withdrew regularly ₹ 2,000 every month for the six months ending 31st March, 2024. If interest on drawings is charged @ 8% p.a., the interest charged will be ______.

Abha, Manju and Rhea were partners in a firm sharing profits and losses in the ratio of 3 : 3 : 4. During the year ended 31st March, 2023, Rhea withdrew ₹ 30,000 at the beginning of each half year. Interest on Rhea’s drawings @ 10% p.a. for the year ended 31st March, 2023, will be ______.

A partner draws ₹ 2,000 each on 1st April 2023, 1st July 2023, 1st October, 2023 and 1st January 2024. For the year ended 31st March, 2024 interest on drawings @ 8% per annum will be ______.

Usha and Mohak were partners in a firm. Usha withdrew a fixed amount at the end of every half year for the year ended 31st March, 2024. Interest on drawings is charged at 9% p.a. Interest on Usha's drawings will be charged for ______ months.

Bharat, Priti and Vansh are partners in a firm following the fixed capital method. During the year 2025-26, Bharat withdrew ₹ 18,000 in the middle of each half year. The rate of interest on drawings is 6% p.a. What is the interest on drawings charged from Bharat at the end of the year?

Anuj and Kartik were partners in a firm sharing profits and losses in the ratio of 5 : 4. Anuj withdrew ₹ 20,000 at the beginning of every alternate month starting from 1st April, 2023, during the year ended 31st March, 2024. Interest on Anuj’s drawings @ 6% p.a. for the year ended 31st March, 2024, will be:

On 1^st August, 2024 Tom, Jerry and Tyke entered into partnership with capitals of ₹ 5,00,000 each. Interest on Drawings was to be charged @ 6% p.a. For the year ended March 31, 2025, Tyke withdrew ₹ 80,000. What amount of interest on drawings will be charged from Tyke?

P, Q, and R, sharing profits in the ratio of 2 : 1 : 1, have fixed capitals of ₹ 4,00,000, ₹ 3,00,000, and ₹ 2,00,000, respectively. After closing the accounts for the year ending 31st March, 2024, it was discovered that interest on capitals was provided @ 6% instead of 8% p.a. In the adjusting entry:

A, B, and C, sharing profits in the ratio of 2 : 2 : 1 have fixed capitals of ₹ 3,00,000, ₹ 2,00,000 and ₹ 1,00,000 respectively. After closing the accounts for the year ending 31st March, 2024, it was discovered that interest on capitals was provided @ 12% instead of 10% p.a. In the adjusting entry:

X, Y and Z are partners in the ratio of 4 : 3 : 2. Salary to X ₹ 15,000 and to Z ₹ 3,000 omitted, and profits were distributed. For rectification, now X will be credited ______.

A and B are partners in a firm sharing profit in the ratio of 3 : 2. Their Balance Sheet was on 31st March, 2021, was as follows:

Net profit of the year ended 31-3-2021, ₹ 5,000, was divided without providing for interest on capital @ 10% p.a. What will be the amount of interest on A’s Capital?

Choose the correct sequence of the following transactions in context of Division of Profits.

1. Guarantee given by the Firm to Partners.
2. Guarantee given by a Partners to the Firm.
3. Transfer of Profits to Profit and Loss Appropriation Account.
4. Guarantee given by a Partner to another Partner.

Guarantee given to partner ‘A’ by the other partners ‘B and C’ means:

Annu, Banu and Chanu are partners, Chanu has been given a guarantee of minimum profit of ₹ 8,000 by the firm. Firm suffered a loss of ₹ 5,000 during the year. Capital account of Banu will be ______ by ₹ ______.

P and Q are partners sharing profits in the ratio of 1 : 2. R was a manager who received a salary of ₹ 10,000 p.m. in addition to a commission of 10% on net profits after charging such commission. Total remuneration to R amounted to ₹ 1,80,000. Profit for the year before charging salary and commission was ______.

A, B and C are partners, their partnership deed provides for interest on drawings at 8% per annum. B withdrew a fixed amount in the middle of every month, and his interest on drawings amounted to ₹ 4,800 at the end of the year. What was the amount of his monthly drawings?

X and Y are partners. X draws a fixed amount at the beginning of every month. Interest on drawings is charged @ 8% p.a. At the end of the year, interest on X’s drawings amounts to ₹ 2,600. Drawings of X were ______.

A and B are partners. B draws a fixed amount at the end of every month. Interest on drawings is charged @ 15% p.a. At the end of the year, interest on B’s drawings amounts to ₹ 8,250. Drawings of B were ______.

A and B are partners with a profit sharing ratio of 2 : 1 and capitals of ₹ 3,00,000 and ₹ 2,00,000, respectively. They are allowed 6% p.a. interest on their capitals and are charged 10% p.a. interest on their drawings. Their drawings during the year were A ₹ 60,000, and B ₹ 40,000. B’s share of net profit as per the profit and loss appropriation account amounted to ₹ 40,000. Net Profit of the firm before any appropriations was ______.

A and B are partners in a firm. They are entitled to interest on their capitals, but the net profit was not sufficient for this interest. Then the net profit will be distributed among partners in ______.

Pick the odd one out:

Pick the odd one out from the following:

1. Interest is allowed on a loan taken by the firm from a partner.
2. Rent is due to a partner of the firm for using his premises for business purposes.
3. Salary due to the manager of the firm.
4. Salary due to a partner of the firm.

Mango and Banana are partners sharing profits in 3 : 2. Their capitals were ₹ 5,00,000 and ₹ 3,00,000, respectively. As per their partnership deed, Mango was entitled to a salary of ₹ 10,000 p.a. Banana was entitled to a rent of ₹ 20,000 p.a. for his personal property that he had let out to the firm. They were also entitled to interest on their capitals @ 10% p.a. The firm earned a profit of ₹ 1,60,000 before the above adjustments. What amounts will be credited to Mango and Banana’s capital A/c if they follow a fluctuating capital system?

Sohan and Mohan are partners sharing profits and losses in the ratio of 2 : 3 with capitals of ₹ 5,00,000 and ₹ 6,00,000, respectively. On 1st January 2022, Sohan and Mohan granted loans of ₹ 20,000 and ₹ 10,000, respectively, to the firm. Determine the amount of loss borne by each partner for the year ended 31st March 2022 if the loss before interest for the year amounted to ₹ 2,500.

Girdhar, a partner, withdrew ₹ 5,000 in the beginning of each quarter, and interest on drawings was calculated as ₹ 1,500 at the end of accounting year 31 March 2022. What is the rate of interest on drawings charged?

A and B are partners. B draws a fixed amount at the end of every quarter. Interest on drawings is charged @ 15% p.a. At the end of the year, interest on B’s drawings amounted to ₹ 9,000. Drawings of B were ______.

Josh and Jeevan were partners in a firm. During the year ended 31.03.2022, Jeevan withdrew ₹ 5,000 per month starting from 30.06.2021. The partnership deed provided that interest on drawings will be charged @ 12% per annum. The average number of months for which interest on Jeevan’s total drawings will be charged is ______.

After doing the adjustments regarding drawings ₹ 40,000, share of profit ₹ 24,000 and the additional capital introduced ₹ 32,000, the capital of Ashok, a partner, as on 31.03.2022, was ₹ 5,00,000. His capital as on 01.04.2021 was ______.

In a partnership firm, which of the following statements is true in respect of the liability of a partner?

‘The business of a partnership concern may be carried on by all the partners, or any of them acting for all.’ The above statement highlights which of the following features of partnership?

The commission due to a partner is closed by ______.

Which of the following is a right of a partner?

1. Sharing profits and losses with other partners in the agreed ratio.
2. Inspecting and having a copy of the books of accounts.
3. Retiring from the firm without giving proper notice.
4. Taking part in the conduct of the business.

Choose the correct option:

Abbay, Boris and Chetan were partners in a firm sharing profits in the ratio of 5 : 3 : 2. Boris was guaranteed a profit of ₹ 95,000. Any deficiency on account of this was to be borne by Abbay and Chetan equally. The firm earned a profit of ₹ 2,00,000 for the year ended 31st March, 2023. The amount given by Abbay to Boris as a guaranteed amount will be ______.

Ravi, Mohan and Vinod were partners in a firm sharing profits and losses in the ratio of 2 : 2: 1. The partnership deed provided that interest on partner's drawings will be charged @ 12% p.a. Starting from 1st July, 2023, Mohan withdrew ₹ 20,000 every month for his personal use. For the year ended 31st March, 2024 interest on Mohan's drawings will be charged for ______ months.

Manoj, Dilip and Rajinder were partners in a firm sharing profits and losses in the ratio of 7 : 3 : 5. Their fixed capitals were ₹ 10,00,000, ₹ 8,00,000 and ₹ 6,00,000, respectively. The partnership deed provided for interest on partner's drawings @ 12% p.a. Which of the following accounts will be debited for charging interest on partner's drawings?

Ganga and Triveni were partners with capitals of ₹ 2,00,000 and ₹ 4,00,000, respectively. Saraswati was admitted for a `1/4`th share in the profits. Saraswati was unable to bring her share of the goodwill premium in cash. The journal entry recorded for goodwill premium is given below:

The new profit-sharing ratio will be:

A and B are partners. The net divisible profit as per Profit and Loss Appropriation A/c is ₹ 2,50,000. The total interest on the partner’s drawings is ₹ 4,000. A’s salary is ₹ 4,000 per quarter, and B’s salary is ₹ 40,000 per annum. Net profit/loss earned during the year was ______.

A and B are partners sharing profits in 3 : 2 with capitals of ₹ 6,00,000 and ₹ 4,00,000, respectively. They are entitled to interest on their capitals @ 10% p.a., and A is also entitled to a rent of ₹ 10,000 per month for use of his property by the firm. Net Profit earned by the firm for the year ended 31st March 2020 was ₹ 3,00,000. B’s share of profit will be ______.

Pick the odd one out of the following:

1. Interest allowed on a loan taken by the firm from a partner.
2. Rent is due to a partner of the firm for using his premises for business purposes.
3. Salary due to the manager of the firm.
4. Transfer of General Reserve

X and Y are partners in the ratio of 2 : 1. Their capitals are ₹ 3,00,000 and ₹ 2,00,000, respectively. Interest on capitals is allowed @ 9% p.a. The firm earned a profit of ₹ 30,000 for the year ended 31st March 2024. Interest on Capital will be ______.

A and B were partners sharing profits in 2 : 1 ratio. During the year ended 31st March, 2024, A’s drawings were ₹ 10,000 per month drawn in the beginning of every month and B’s drawings were ₹ 10,000 per month drawn at the end of every month. After the preparation of final accounts, it was discovered that interest on drawings @ 12% p.a. was not taken into consideration. In the adjustment entry ______.

A, B and C were partners sharing profits in the ratio of 4 : 3 : 2. It was provided that B’s share of profit will not be less than ₹ 1,50,000 per annum. The losses for the year ended 31st March, 2024, were ₹ 80,000 before allowing interest on Loan of ₹ 2,00,000 taken from A on 1st June, 2023.

The share of each partner’s profit/loss will be:

Remuneration to the manager will be:

Interest on capital allowed to partners will be:

Shreya’s share of profit will be:

Pick the odd one out:

1. Salary to a partner
2. Rent to a partner
3. Commission to a partner
4. Interest on partner’s capital

A and B were partners in a firm sharing profits in the ratio of 2 : 1. The partnership deed provided interest on drawings @ 12% p.a. During the year:

1. A’s drawings were ₹ 5,000 per month in the beginning of every month.
2. B’s drawings were ₹ 10,000 per quarter.

Net profit for the year was distributed without charging interest on drawings. In the adjustment entry:

Chitra and Divya were partners in a firm. Their respective fixed capitals were ₹ 15,00,000 and ₹ 10,00,000. The partnership deed provided interest on drawings @ 6% p.a.

During the year ended 31-3-2024, Chitra’s drawings were ₹ 10,000 per month, drawn at the end of every month, and Divya’s drawings were ₹ 30,000 per quarter, drawn at the beginning of every quarter.

Net profits for the year were distributed without taking into consideration the interest on drawings.

In the adjusting entry:

The partners of a firm distributed the profits for the year ended 31st March, 2024, ₹ 90,000, in equal proportion without providing for the following adjustments:

1. A and B each were entitled to a salary of ₹ 1,500 per quarter.
2. C was entitled to a commission of ₹ 18,000.
3. Profits were to be shared in the ratio of 3 : 2 : 1.

In the adjustment entry:

A and B are partners with capitals of ₹ 3,00,000 and ₹ 2,00,000, respectively. As per the partnership deed:

1. Profits and losses are to be shared in the ratio of 2 : 1.
2. 10% of the distributable profit should be transferred to General Reserve.

For the year ending 31st March, 2024, B’s share of profit was ₹ 1,20,000.

The amount transferred to General Reserve will be:

A, B and C were partners sharing profits in the ratio of 1 : 2 : 3. A withdrew ₹ 10,000 every month, B withdrew ₹ 1,20,000 during the year and C withdrew ₹ 30,000 during each quarter. It was discovered that for the year ending 31st March 2024, interest on drawings was charged @ 7% p.a. whereas there is no provision for interest on drawings in the partnership deed. In the rectifying entry:

X and Y are partners with capitals of ₹ 4,00,000 and ₹ 2,00,000, respectively, on 1st April, 2023, and their profit sharing ratio is 3 : 2. Interest on capital is agreed @ 5% p.a. Y is to be allowed a salary of ₹ 5,000 p.m. The profit for the year ended 31st March, 2024, amounted to ₹ 1,54,000. The manager is entitled to a commission of 10% of the profits after charging such commission. Y’s share of profit will be ______.

1. Rashmi’s commission will be:
   1. ₹ 40,000
   2. ₹ 44,000
   3. ₹ 36,000
   4. ₹ 36,364
2. Rashmi’s share of profit will be:
   1. ₹ 1,80,000
   2. ₹ 1,44,000
   3. ₹ 2,16,000
   4. ₹ 1,60,000
3. In case there is no partnership agreement, which of the following is incorrect:
   1. Interest on the partner’s loan will be allowed at 6% p.a.
   2. No interest is to be charged on drawings made by the partners.
   3. Interest on the partner’s loan to the firm will not be allowed in case of loss in the firm.
   4. Even if the capitals of partners are unequal, profits and losses are to be shared equally.

Tripti and Khushi are partners sharing profits in the ratio of 3 : 2. Ruchi was a manager who received a quarterly salary of ₹ 20,000 in addition to a commission of 10% on net profits after charging such commission. Total remuneration to Ruchi amounted to ₹ 1,30,000. What was the profit for the year before charging salary and commission?

C and D contribute ₹ 5,00,000 and ₹ 3,00,000, respectively, in a partnership firm by way of capital, on which they agree to allow interest @ 6% p.a. Their profit or loss sharing ratio is 2 : 3. The profit at the end of the year was ₹ 16,000 before allowing interest on capital. If there is a clear agreement that interest on capital will be paid even in case of loss, then D’s share will be:

On 31st March, 2024, the balances in the capital accounts of Aditi and Chanda after making adjustments for profits and drawings were ₹ 4,00,000 and ₹ 2,50,000, respectively. Subsequently, it was discovered that the interest on capital had been omitted.

The profit for the year ended on 31st March, 2024, was ₹ 1,50,000.

During the year, Aditi and Chanda each withdrew ₹ 5,000 per month.

Interest on capital was to be allowed @ 10% per annum.

The profit-sharing ratio of partners was 2 : 1.

Interest on capital will be:

Y is a partner in a firm. He withdrew regularly ₹ 12,000 at the end of every month for six months ending 31st March, 2024. If interest on drawings is charged @ 10% p.a., the interest charged will be ______.

Nandi is a partner in a firm. He withdrew ₹ ......... per month in the middle of every month during the year ended 31st March, 2024. If interest on drawings is charged @ 8% p.a. and the interest charged is ₹ 1,920, then he withdrew how much amount per month?

Interest on drawings will amount to:

Share of profit will be:

Ravi’s Current Account Balance will be:

If the capital of a partner is ₹ 1,00,000 and his personal assets are ₹ 40,000 and personal liabilities are ₹ 10,000, the extent of his liability in the firm will be:

A, B and C are partners sharing profits in 3 : 2 : 1. C’s share of profits for the year ending 31st March 2024 amounts to ₹ 50,000. Interest allowed on the partner’s capital is ₹ 1,50,000, and A is allowed a salary of ₹ 5,000 per month. Interest charged on the partner’s drawings is ₹ 2,000. What was the net profit of the firm before any appropriations?

On 1st April, 2023, the capitals of Monika and Shreya were ₹ 4,00,000 and ₹ 2,00,000, respectively. They divided profits in the ratio of 3 : 2. Profits for the year ended 31st March, 2024, were ₹ 3,00,000, which have been duly distributed among the partners, but the following transactions were not passed through the books:

1. Interest on capitals @ 8% p.a.
2. Interest on drawings of Monika ₹ 8,000.
3. Monika is to be paid a salary of ₹ 15,000 per quarter.

In the adjustment entry:

Rani and Sakhi are partners with capitals of ₹ 4,00,000 and ₹ 1,00,000, respectively. They are entitled to interest on their capitals @ 10% p.a. In addition, Rani is entitled to a salary of ₹ 4,000 per month, and Sakhi is entitled to rent of ₹ 5,000 per month for use of her office by the firm. Net profit for the year was ₹ 2,00,000. Rani’s share of profit will be ______.

Esha, Kavya and Ruchi were partners sharing profits in the ratio of 2 : 2 : 1. Esha withdrew ₹ 5,000 every month, and Kavya withdrew ₹ 7,500 every month. Interest on drawings @ 6% p.a. was charged, whereas the partnership deed was silent about interest on drawings.

In the adjustment entry:

A, B and C were partners in the ratio of 3 : 2 : 1. Their capitals were ₹ 5,00,000; ₹ 4,00,000 and ₹ 3,00,000, respectively, and as per the partnership deed, they were entitled to 10% p.a. interest on their capitals. On 31st March 2024, their books reflected a net profit of ₹ 1,20,000. As per partnership deed a salary of ₹ 30,000 each was payable to A and B.

Calculate the ratio in which the profits would be appropriated.

Geeta and Parul are partners in a firm. As per partnership deed interest on drawings is to be charged @ 4% p.a. Parul withdrew ₹ 5,000 per month at the end of each month for the first six months of the year. Accounts are closed on 31st March, 2024. Interest on drawings will be ______.

A, B, C and D are partners. A and B share `3/4`th of profits in the ratio of 2 : 1 and C and D share the remaining profits equally. Profit sharing ratios will be ______.

Arti and Bina are partners with profit sharing ratio of 2 : 1 and capitals of ₹ 5,00,000 and ₹ 4,00,000, respectively. They are allowed 8% p.a. interest on their capitals and are charged 10% p.a. interest on their drawings. Their drawings during the year were Arti ₹ 80,000 and Bina ₹ 60,000. Arti’s share of net profit as per the profit and loss appropriation account amounted to ₹ 1,00,000. Net profit of the firm before any appropriations was ______.

Read the following hypothetical situation and answer the following questions:

1. The amount to be reflected in blank (1) will be:
   1. ₹ 37,200
   2. ₹ 44,700
   3. ₹ 22,800
   4. ₹ 20,940
2. The amount to be reflected in blank (2) will be:
   1. ₹ 62,000
   2. ₹ 74,500
   3. ₹ 71,400
   4. ₹ 70,775

Shyam, Gopal and Arjun are partners carrying on a garment business. Shyam withdrew ₹ 10,000 in the beginning of each quarter. Gopal withdrew garments amounting to ₹ 15,000 to distribute it to flood victims, and Arjun withdrew ₹ 20,000 from his capital account. The partnership deed provides for interest on drawings @ 10% p.a. The interest on the drawing charged from Shyam, Gopal and Arjun at the end of the year will be:

Edward and Hayward are partners. Edward draws a fixed amount at the beginning of every quarter. Interest on drawings is charged @ 10% p.a. At the end of the year, interest on Edward’s drawings amounted to ₹ 7,500. Drawings of Edward were ______.

Ayan, Azan and Aqib are partners carrying on a furniture business.

Ayan withdrew ₹ 5,000 at the end of each month.

Azan withdrew ₹ 10,000 at end of each quarter.

Aqib withdrew ₹ 40,000 at the end of each month for the last six months of the year. The partnership deed provides for interest on drawings @ 12% p.a. The interest on drawing charged from Ayan, Azan and Aqib at the end of the year will be:

Ikka, Dukka and Teeka were partners sharing profits and losses in the ratio of 2 : 2 : 1. Their fixed capital balances were ₹ 5,00,000; ₹ 4,00,000 and ₹ 3,00,000 respectively. For the year ended March 31, 2024, profits of ₹ 84,000 were distributed without providing for interest on capital @ 10% p.a. as per the partnership deed.

While passing an adjustment entry, which of the following is correct?

Arjun and Bhim were partners in a firm sharing profits in the ratio 3 : 2. On 31st March 2023, their capitals were ₹ 1,29,000 and ₹ 1,08,000, respectively. Divisible Profit for the year ended 31st March 2023 was ₹ 50,000. Interest on capital was also provided @ 10% p.a. in accordance with the partnership deed. Determine interest on Arjun’s Capital for the year ended. 31.03.2023.

Assertion (A): Partnership is the result of an agreement between two or more persons to do business and share its profits and losses.

Reason (R): Partnership agreement should always be in writtem form.

Choose the correct option from the following:

Assertion (A): Each partner carrying on the business of the firm is the principal as well as the agent for all the other partners of the firm.

Reason (R): There exists a relationship of mutual agency between all the partners.

Choose the correct option from the following:

Assertion (A): A partnership firm can have maximum 50 partners.

Reason (R): Maximum limit of partners is prescribed in the Partnership Act, 1932.

In the context of the above two statements, which of the following is correct?

Assertion (A): Partners are principals but not the agents of other partners.

Reason (R): Partners are principals as well as agents of other partners.

In the context of the above two statements, which of the following is correct?

Assertion (A): When the profit-sharing ratio is agreed upon among the partners, they will share the losses also in the same ratio.

Reason (R): Although in the definition of partnership given in the Partnership Act it is stated that profits will be shared, profits include losses also.

In the context of the above two statements, which of the following is correct?

Assertion (A): A minor cannot be admitted in a firm as a partner.

Reason (R): A minor can participate in the profits of a firm.

In the context of the above two statements, which of the following is correct?

Assertion (A): When a clause in a partnership deed differs from provisions of the Partnership Act 1932, the clause in the partnership deed will be applicable.

Reason (R): Provisions of the Partnership Act 1932 will be applicable only when partners have not agreed on a matter.

In the context of the above two statements, which of the following is correct?

Assertion (A): Partnership may be conducted on the basis of written or oral agreement, and all partners should contribute capital in the firm.

Reason (R): It is necessary that a written agreement exists and the business may be conducted on by all or any of them acting for all.

In the context of the above two statements, which of the following is correct?

Assertion (A): Priti, Riya and Sarita are partners. As per partnership deed Priti is to be allowed a salary of ₹ 8,000 per month. Riya and Sarita also demand the same salary. Salaries to Riya and Sarita is to be allowed.

Reason (R): In the absence of mention of salaries to Riya and Sarita in the partnership deed, salaries to Riya and Sarita are not to be allowed.

In the context of the above two statements, which of the following is correct?

Assertion (A): Rent payable to a partner is debited to Profit and Loss Account and not debited to the Profit and Loss Appropriation Account.

Reason (R): Rent payable to a partner is a charge against profits and not an appropriation of profit. Hence, it is debited to Profit and Loss Account.

In the context of the above two statements, which of the following is correct?

Assertion (A): A, B and C were partners in a firm. Partner B gave a loan of ₹ 10,00,000 to the firm without an agreement as to the rate of interest. At the year end, all partners agreed to allow interest on the loan by B @ 9% p.a.

Reason (R): In the absence of Partnership Deed provisions of the Partnership Act, 1932 apply. Thus, interest on a loan by B should be allowed @ 6% p.a. and not @ 9% p.a.

In the context of the above two statements, which of the following is correct?

Assertion (A): In case the amount of drawings is not the same or if drawings are made on different dates, interest on drawings will be calculated using the product method.

Reason (R): In such a case, interest on drawings is charged for the period it is drawn by a partner. As such, the average method cannot be used to ascertain the amount of interest on drawings.

In the context of the above two statements, which of the following is correct?

Assertion (A): A and B are partners in a firm. As per partnership deed interest on drawings is to be charged @ 9% p.a. A withdrew ₹ 10,000 per month at the end of each month, and B withdrew ₹ 10,000 per quarter at the end of each quarter. The firm incurred a loss of ₹ 2,00,000. Hence, interest will not be charged on drawings.

Reason (R): Interest on drawings will be charged @ 9% p.a. on ₹ 1,20,000 from A for 5.5 months and from B for 4.5 months.

In the context of the above two statements, which of the following is correct?

Assertion (A): In the case of a partnership firm, appropriation out of profits are debited to the Profit and Loss Appropriation Account.

Reason (R): Interest on capital and partner’s salary are appropriation of profit.

In the context of the above two statements, which of the following is correct?

Assertion (A): Transfer to reserves is shown in the Profit and Loss Appropriation A/c.

Reason (R): Reserves are charge against the profits.

In the context of the above two statements, which of the following is correct?

Assertion (A): In a specified situation, interest on a partner’s capital is written in the Profit and Loss Account.

Reason (R): Interest on a partner’s capital is written on the debit side of the profit and Loss Account if it is specified to be a charge against profits.

In the context of the above two statements, which of the following is correct?

Assertion (A): The fixed capital account balance of a partner may change due to additional capital introduced or capital withdrawn or both during the year.

Reason (R): Under the fixed capital method, the partner’s capital accounts balance always remains the same.

In the context of the above two statements, which of the following is correct?

Assertion (A): Co-ownership of property amounts to partnership.

Reason (R): The element of business is present in co-ownership.

In the context of the above two statements, which of the following is correct?

Assertion (A): In order to form a partnership, there should be at least two persons coming together for a common goal. The maximum number of partners is 50 (fifty) as prescribed by the Central Government.

Reason (R): As per Sec. 464 of the Companies Act 2013, the Central Government is empowered to prescribe a maximum number of partners, but the maximum number of partners cannot exceed 100. The central government has prescribed the maximum number of partners to be 50.

In light of the above statements, choose the most appropriate answer from the options given below:

Assertion (A): Commission provided to the partner is shown in the Profit and Loss A/c.

Reason (R): Commission provided to the partner is charge against profits and is to be provided at a fixed rate.

Assertion (A): Partnership is the relation between persons who have agreed to share the profits of the business carried on by all or any of them acting for all.

Reason (R): If a partner carries on any business of the same nature and competing with that of the firm, he/she shall account for and pay to the firm all profit made by him/her in that business.

Choose the correct option from the following:

Assertion (A): Michael, Mike and Stephen were partners sharing profits and losses in the ratio 3 : 2 : 1. Stephen, being a partner, wants that he should be exempted from sharing the losses in the firm.

Reasoning (R): According to the Partnership Act 1932, “It may be agreed between the partners that one or more of them shall not be liable for losses.”

Assertion (A): Each partner is a principal as well as an agent for all the other partners.

Reason (R): As per the definition of the Partnership Act, partnership business may be carried on by all the partners or any of them acting for all.

Choose the correct alternative from the following:

Assertion: A partnership firm is said to maintain its accounts by the fixed capital account method when it has a separate capital account and current account for every partner.

Reason: A fixed capital account method is maintained to ensure that the balance in the current account of any partner is not overdrawn at any point of time.

Which one of the following is correct?