Accountancy

The firm of Harry, Porter and Ali, who have been sharing profits in the ratio of 2 : 2 : 1, have existed for same years. Ali wants that he should get equal share in the profits with Harry and Porter and he further wishes that the change in the profit-sharing ratio should come into effect retrospectively were for the three years. Harry and Porter have agreement on this account. The profits for the last three years were:

Year2015-162016-172017-18Profit (Rs.)2,20,0002,40,0002,90,000 Show adjustment of profits by means of a single adjustment Journal entry. Solution

Continue ReadingThe firm of Harry, Porter and Ali, who have been sharing profits in the ratio of 2 : 2 : 1, have existed for same years. Ali wants that he should get equal share in the profits with Harry and Porter and he further wishes that the change in the profit-sharing ratio should come into effect retrospectively were for the three years. Harry and Porter have agreement on this account. The profits for the last three years were:

Capital Accounts of A and B stood at Rs. 4,00,000 and Rs. 3,00,000 respectively after necessary adjustments in respect of the drawings and the net profit for the year ended 31st March, 2019. It was subsequently noticed that 5% p.a. interest on capital and also drawings were not taken into account in arriving at the distributable profit. The drawings of the partners had been: A – Rs. 12,000 drawn at the end of each quarter and B – Rs. 18,000 drawn at the end of each half year. The profit for the year as adjusted amounted to Rs. 2,00,000. The partners share profits in the ratio of 3 : 2. You are required to pass Journal entries and show adjusted Capital Accounts of the partners.

Solution

Continue ReadingCapital Accounts of A and B stood at Rs. 4,00,000 and Rs. 3,00,000 respectively after necessary adjustments in respect of the drawings and the net profit for the year ended 31st March, 2019. It was subsequently noticed that 5% p.a. interest on capital and also drawings were not taken into account in arriving at the distributable profit. The drawings of the partners had been: A – Rs. 12,000 drawn at the end of each quarter and B – Rs. 18,000 drawn at the end of each half year. The profit for the year as adjusted amounted to Rs. 2,00,000. The partners share profits in the ratio of 3 : 2. You are required to pass Journal entries and show adjusted Capital Accounts of the partners.

Capitals of A, B and C as on 31st March, 2019 amounted to Rs. 90,000, Rs. 3,30,000 and Rs. 6,60,000 respectively. Profit of Rs. 1,80,000 for the year ended 31st March, 2019 was distributed in the ratio of 4 : 1 : 1 after allowing interest on Capital @ 10% p.a. During the year, each partner withdrew Rs. 3,60,000. The Partnership Deed was silent as to profit-sharing ratio but provided for interest on capital @ 12%. Pass the necessary adjustment entry showing the working clearly.

Solution

Continue ReadingCapitals of A, B and C as on 31st March, 2019 amounted to Rs. 90,000, Rs. 3,30,000 and Rs. 6,60,000 respectively. Profit of Rs. 1,80,000 for the year ended 31st March, 2019 was distributed in the ratio of 4 : 1 : 1 after allowing interest on Capital @ 10% p.a. During the year, each partner withdrew Rs. 3,60,000. The Partnership Deed was silent as to profit-sharing ratio but provided for interest on capital @ 12%. Pass the necessary adjustment entry showing the working clearly.

On 31st March, 2014, the balances in the Capital Accounts of Saroj, Mahinder and Umar after making adjustments for profits and drawings, etc; were Rs. 80,000, Rs. 60,000, Rs. 40,000 respectively. Subsequently, it was discovered that the interest on capital and drawings has been omitted. (a) The profit for the year ended 31st March, 2014 was Rs. 80,000. (b) During the year Saroj and Mahinder each withdrew a sum of Rs. 24,000 in equal instalments in the end of each month and Umar withdrew Rs. 36,000. (c) The interest on drawings was to be charged @ 5% p.a. and interest on capital was to be allowed @ 10% p.a. (d) The profit-sharing ratio among partners was 4 : 3 : 1. Showing your workings clearly, pass the necessary rectifying entry.

Solution

Continue ReadingOn 31st March, 2014, the balances in the Capital Accounts of Saroj, Mahinder and Umar after making adjustments for profits and drawings, etc; were Rs. 80,000, Rs. 60,000, Rs. 40,000 respectively. Subsequently, it was discovered that the interest on capital and drawings has been omitted. (a) The profit for the year ended 31st March, 2014 was Rs. 80,000. (b) During the year Saroj and Mahinder each withdrew a sum of Rs. 24,000 in equal instalments in the end of each month and Umar withdrew Rs. 36,000. (c) The interest on drawings was to be charged @ 5% p.a. and interest on capital was to be allowed @ 10% p.a. (d) The profit-sharing ratio among partners was 4 : 3 : 1. Showing your workings clearly, pass the necessary rectifying entry.

A, B and C are partners in a firm. Net profit of the firm for the year ended 31st March, 2019 is Rs. 30,000, which has been duly distributed among the partners, in their agreed ratio of 3 : 1 : 1. It is noticed on 10th April, 2019 that the undermentioned transactions were not passed through the books of account of the firm for the year ended 31st March, 2019. (a) Interest on Capital @ 6% per annum, the capital of A, B and C being Rs. 50,000; Rs. 40,000 and Rs. 30,000 respectively. (b) Interest on drawings: A Rs. 350; B Rs. 250; C Rs. 150. (c) Partners’ Salaries: A Rs. 5,000; B Rs. 7,500. (d) Commission due to A (for some special transaction) Rs. 3,000. You are required to pass a Journal entry, which will not affect Profit and Loss Account of the firm and rectify the position of partners inter se.

Solution

Continue ReadingA, B and C are partners in a firm. Net profit of the firm for the year ended 31st March, 2019 is Rs. 30,000, which has been duly distributed among the partners, in their agreed ratio of 3 : 1 : 1. It is noticed on 10th April, 2019 that the undermentioned transactions were not passed through the books of account of the firm for the year ended 31st March, 2019. (a) Interest on Capital @ 6% per annum, the capital of A, B and C being Rs. 50,000; Rs. 40,000 and Rs. 30,000 respectively. (b) Interest on drawings: A Rs. 350; B Rs. 250; C Rs. 150. (c) Partners’ Salaries: A Rs. 5,000; B Rs. 7,500. (d) Commission due to A (for some special transaction) Rs. 3,000. You are required to pass a Journal entry, which will not affect Profit and Loss Account of the firm and rectify the position of partners inter se.

Mudit, Sudhir and Uday are partners in a firm sharing profits in the ratio of 3 : 1 : 1. Their fixed capital balances are Rs. 4,00,000, Rs. 1,60,000 and Rs. 1,20,000 respectively. Net profit for the year ended 31st March, 2018 distributed amongst the partners was  Rs. 1,00,000, without taking into account the following adjustments: (a) Interest on capitals @ 2.5% p.a.; (b) Salary to Mudit Rs. 18,000 p.a. and commission to Uday Rs. 12,000. (c) Mudit was allowed a commission of 6% of divisible profit after charging such commission. Pass a rectifying Journal entry in the books of the firm. Show workings clearly.

Solution

Continue ReadingMudit, Sudhir and Uday are partners in a firm sharing profits in the ratio of 3 : 1 : 1. Their fixed capital balances are Rs. 4,00,000, Rs. 1,60,000 and Rs. 1,20,000 respectively. Net profit for the year ended 31st March, 2018 distributed amongst the partners was  Rs. 1,00,000, without taking into account the following adjustments: (a) Interest on capitals @ 2.5% p.a.; (b) Salary to Mudit Rs. 18,000 p.a. and commission to Uday Rs. 12,000. (c) Mudit was allowed a commission of 6% of divisible profit after charging such commission. Pass a rectifying Journal entry in the books of the firm. Show workings clearly.

Mannu and Shristhi are partners in a firm sharing profit in the ratio of 3 : 2. Following information is of the firm as on 31st March 2019:

LiabilitiesAmount (Rs.)AssetsAmount (Rs.)Mannu’s Capital      (30,000) Drawings:Shristhi’s Capital (10,000)40,000Mannu  (4,000) Shresthi (2,000)6,000 Other Assets34,000Total40,000 Total40,000 Profit for the year ended 31st March, 2019 was Rs. 5,000 which was divided in the agreed ratio, but interest @ 5% p.a. on capital…

Continue ReadingMannu and Shristhi are partners in a firm sharing profit in the ratio of 3 : 2. Following information is of the firm as on 31st March 2019:

Naveen, Qadir and Rajesh were Partners doing an Electronic Goods Business in Uttarakh and. After the accounts of partnership were drawn up and closed, it was discovered that interest on capital has been allowed to Partners @ 6% Per Annum for the years ending 31st March, 2017 and 2018, although there is no provision for interest on capital in the partnership deed. On the other hand, Naveen and Qadir were entitled to a Salary of Rs. 3,500 and Rs. 4,000 Per Quarter respectively, which has not been taken into consideration. Their respective Fixed Capitals were Rs. 4,00,000, Rs. 3,60,000 and Rs. 2,40,000. During the last two years, they had shared the Profits and Losses as follows :  Year Ended Ratio 31st March , 2017 3 : 2 : 1 31st March , 2018 5 : 3 : 2. Pass necessary Adjusting Entry for the above Adjustments in the Books of the Firm on 1st April, 2018. Show your workings clearly

Solution

Continue ReadingNaveen, Qadir and Rajesh were Partners doing an Electronic Goods Business in Uttarakh and. After the accounts of partnership were drawn up and closed, it was discovered that interest on capital has been allowed to Partners @ 6% Per Annum for the years ending 31st March, 2017 and 2018, although there is no provision for interest on capital in the partnership deed. On the other hand, Naveen and Qadir were entitled to a Salary of Rs. 3,500 and Rs. 4,000 Per Quarter respectively, which has not been taken into consideration. Their respective Fixed Capitals were Rs. 4,00,000, Rs. 3,60,000 and Rs. 2,40,000. During the last two years, they had shared the Profits and Losses as follows :  Year Ended Ratio 31st March , 2017 3 : 2 : 1 31st March , 2018 5 : 3 : 2. Pass necessary Adjusting Entry for the above Adjustments in the Books of the Firm on 1st April, 2018. Show your workings clearly

Piya and Bina are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following was the Balance Sheet of the firm as on 31st March, 2016:

LiabilitiesAmount (Rs.)AssetsAmount (Rs.)Capitals: Sundry Assets1,20,000Piya (80,000)  Bina (40,000)1,20,000 Total1,20,000 Total1,20,000     The profits Rs. 30,000 for the year ended 31st March, 2016 were divided between the partners without allowing interest on capital @ 12% p.a. salary to Piya @ Rs. 1,000…

Continue ReadingPiya and Bina are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following was the Balance Sheet of the firm as on 31st March, 2016: