Accountancy

A and B are partners sharing profits and losses in the ratio of 3: 1. On 1st April, 2018, their capitals were: A Rs. 50,000 and B Rs. 30,000. During the year ended 31st March, 2019 they earned a net profit of Rs. 50,000. The terms of partnership are: (a) Interest on capital is to allowed @ 6% p.a. (b) A will get a commission @ 2% on turnover. (c) B will get a salary of Rs. 500 per month. (d) B will get commission of 5% on profits after deduction of all expenses including such commission. Partners’ drawings for the year were: A Rs. 8,000 and B Rs. 6,000. Turnover for the year was Rs. 3,00,000. After considering the above facts, you are required to prepare Profit and Loss Appropriation Account and Partners’ Capital Accounts.

Solution

Continue ReadingA and B are partners sharing profits and losses in the ratio of 3: 1. On 1st April, 2018, their capitals were: A Rs. 50,000 and B Rs. 30,000. During the year ended 31st March, 2019 they earned a net profit of Rs. 50,000. The terms of partnership are: (a) Interest on capital is to allowed @ 6% p.a. (b) A will get a commission @ 2% on turnover. (c) B will get a salary of Rs. 500 per month. (d) B will get commission of 5% on profits after deduction of all expenses including such commission. Partners’ drawings for the year were: A Rs. 8,000 and B Rs. 6,000. Turnover for the year was Rs. 3,00,000. After considering the above facts, you are required to prepare Profit and Loss Appropriation Account and Partners’ Capital Accounts.

Show how the following will be recorded in the Capital Accounts of the Partners Sohan and Mohan when their capitals are fluctuating:

 Sohan(Rs.)   Mohan(Rs.)   Capital on 1st April, 20184,00,0003,00,000Drawings during the year ended 31st march, 201950,00030,000Interest on Capital5%5%Interest on Drawings1,250750Share of Profit for the year ended 31st march, 201960,00050,000Partner's Salary36,000.....Commission5,0003,000 Solution

Continue ReadingShow how the following will be recorded in the Capital Accounts of the Partners Sohan and Mohan when their capitals are fluctuating:

Amit and Vijay started a partnership business on 1st April, 2018. Their capital contributions were Rs. 2,00,000 and Rs. 1,50,000 respectively. The Partnership Deed provided as follows: (a) Interest on capital be allowed @ 10% p.a. (b) Amit to get a salary of Rs. 2,000 per month and Vijay Rs. 3,000 per month. (c) Profits are to be shared in the ratio of 3: 2. Net profit for the year ended 31st March, 2019 was Rs. 2,16,000. Interest on drawings amounted to Rs. 2,200 for Amit and Rs. 2,500 for Vijay. Prepare Profit and Loss Appropriation Account.

Solution

Continue ReadingAmit and Vijay started a partnership business on 1st April, 2018. Their capital contributions were Rs. 2,00,000 and Rs. 1,50,000 respectively. The Partnership Deed provided as follows: (a) Interest on capital be allowed @ 10% p.a. (b) Amit to get a salary of Rs. 2,000 per month and Vijay Rs. 3,000 per month. (c) Profits are to be shared in the ratio of 3: 2. Net profit for the year ended 31st March, 2019 was Rs. 2,16,000. Interest on drawings amounted to Rs. 2,200 for Amit and Rs. 2,500 for Vijay. Prepare Profit and Loss Appropriation Account.

C and D are partners in a firm; C has contributed Rs. 1,00,000 and D Rs. 60,000 as capital. Interest in payable @ 6% p.a. and D is entitled to a salary of Rs. 3,000 per month. In the year ended 31st March, 2019, the profit was Rs. 80,000 before interest and salary. Divide the amount between C and D.

Solution

Continue ReadingC and D are partners in a firm; C has contributed Rs. 1,00,000 and D Rs. 60,000 as capital. Interest in payable @ 6% p.a. and D is entitled to a salary of Rs. 3,000 per month. In the year ended 31st March, 2019, the profit was Rs. 80,000 before interest and salary. Divide the amount between C and D.

Kanika and Gautam are partners doing a dry-cleaning business in Lucknow, sharing profits in the ratio 2: 1 with capitals Rs. 5,00,000 and Rs. 4,00,000 respectively. Kanika withdrew the following amounts during the year to pay the hostel expenses of her son:

1st April Rs. 10,0001st June Rs. 9,0001st November Rs. 14,0001st December Rs. 5,000 Gautam withdrew Rs. 15,000 on the first day of April, July, October and January to pay rent for the accommodation of his family. He also paid Rs. 20,000 per…

Continue ReadingKanika and Gautam are partners doing a dry-cleaning business in Lucknow, sharing profits in the ratio 2: 1 with capitals Rs. 5,00,000 and Rs. 4,00,000 respectively. Kanika withdrew the following amounts during the year to pay the hostel expenses of her son:

Calculate interest on drawings of Ashok @ 10% p.a. for the year ended 31st March, 2019, in each of the following alternative cases: Case 1. If he withdrew Rs. 7,500 in the beginning of each quarter. Case 2. If he withdrew Rs. 7,500 at the end of each quarter. Case 3. If he withdrew Rs. 7,500 during the middle of each quarter.

Solution Total Drawings = 7,500 × 4 = Rs 30,000Interest Rate = 10% p.a. Case (a)When equal amount is withdrawn in the beginning of each quarter, the interest on drawings…

Continue ReadingCalculate interest on drawings of Ashok @ 10% p.a. for the year ended 31st March, 2019, in each of the following alternative cases: Case 1. If he withdrew Rs. 7,500 in the beginning of each quarter. Case 2. If he withdrew Rs. 7,500 at the end of each quarter. Case 3. If he withdrew Rs. 7,500 during the middle of each quarter.

A and B are partners sharing profits equally. A drew regularly Rs. 4,000 at the end of every month for six months ended 30th September, 2019. Calculate interest on drawings @ 5% p.a. for a period of six months.

Solution Average month = time lift after first drawing + time lift after last drawing ÷2= 5+0÷2 = 2.5 Interest on drawing= total drawing×Rate of drawing/100×Average month / 12=24,000×5/100×2.5/12 = 250

Continue ReadingA and B are partners sharing profits equally. A drew regularly Rs. 4,000 at the end of every month for six months ended 30th September, 2019. Calculate interest on drawings @ 5% p.a. for a period of six months.

One of the partners in a partnership firm has withdrawn Rs. 9,000 at the end of each quarter, throughout the year. Calculate interest on drawings at the rate of 6% per annum.

Solution Amount of Drawings = Rs. 9,000 per quarterAnnual Drawings        = Rs. (9,000 × 4) = Rs. 36,000Rate of Interest on Drawings  = 6% p.a. Average Period=(Months remaining after the first drawings + Months…

Continue ReadingOne of the partners in a partnership firm has withdrawn Rs. 9,000 at the end of each quarter, throughout the year. Calculate interest on drawings at the rate of 6% per annum.

A and B are partners sharing profits equally. A drew regularly Rs. 4,000 in the beginning of every month for six months ended 30th September, 2019. Calculate interest on drawings @ 5% p.a. for a period of six months.

Solution Amount of drawing= 4000No. of drawings= 6Total amount of drawing=24,000Average month = time lift after first drawing + time lift after last drawing ÷2 = 6+1÷2=3.5Interest on drawing= total drawing×Rate of…

Continue ReadingA and B are partners sharing profits equally. A drew regularly Rs. 4,000 in the beginning of every month for six months ended 30th September, 2019. Calculate interest on drawings @ 5% p.a. for a period of six months.