Accountancy

Moli and Bholi contribute Rs. 20,000 and Rs. 10,000 respectively towards capital. They decide to allow interest on capital @ 6% p.a. Their respective share of profits is 2: 3 and the net profit for the year is Rs. 1,500. Show distribution of profits: (i) where there is no agreement except for interest on capitals; and (ii) where there is an agreement that the interest on capital as a charge.

Solution Calculation of Interest on Capital Interest on Moli's Capital= 20,000×6/100=1,200 Interest on Bholi's Capital=10,000×6/100=600 Total Amount of Interest on Capital=1,200+600=1,800 Case (a)  Where there is no clean agreement except for interest on capitals Profit for the year ended = Rs.  1,500…

Continue ReadingMoli and Bholi contribute Rs. 20,000 and Rs. 10,000 respectively towards capital. They decide to allow interest on capital @ 6% p.a. Their respective share of profits is 2: 3 and the net profit for the year is Rs. 1,500. Show distribution of profits: (i) where there is no agreement except for interest on capitals; and (ii) where there is an agreement that the interest on capital as a charge.

From the following Balance Sheet of Long and Short, calculate interest on capital @ 8% p.a. for the year ended 31st March, 2019.  Balance sheet as at 31st March, 2019.

Liabilities Rs.Assets Rs.Long's Capital A/c1,20,000Fixed Assets3,00,000Short's Capital A/c 1,40,000Other Assets   60,000General Reserve 1,00,000  3,60,000 3,60,000 During the year, Long withdrew Rs. 40,000 and Short withdrew Rs. 50,000. Profit for the year was Rs. 1,50,000 out of which Rs. 1,00,000 was transferred to…

Continue ReadingFrom the following Balance Sheet of Long and Short, calculate interest on capital @ 8% p.a. for the year ended 31st March, 2019.  Balance sheet as at 31st March, 2019.

Following is the extract of the Balance Sheet of Neelkant and Mahadev as on 31st March, 2019. Balance sheet as at 31st March, 2019

Liabilities Rs. Assets Rs. Neelkant’s Capital10,00,000 Sundry Assets30,00,000 Mahadev's Capital10,00,000    Neelkant's Current A/c1,00,000   Mahadev' Current A/c1,00,000  Profit and Loss Appropriation A/c (2018-19)8,00,000   30,00,000 30,00,000 During the year, Mahadev's drawings were Rs. 30,000. Profits during the year ended 31st March, 2019 is Rs. 10,00,000. Calculate interest on capital @ 5% p.a.…

Continue ReadingFollowing is the extract of the Balance Sheet of Neelkant and Mahadev as on 31st March, 2019. Balance sheet as at 31st March, 2019

On 1st April, 2013, Jay and Vijay entered into partnership for supplying laboratory equipments to government schools situated in remote and backward areas. They contributed capitals of Rs. 80,000 and Rs. 50,000 respectively and agreed to share the profits in the ratio of 3: 2. The partnership Deed provided that interest on capital shall be allowed at 9% per annum. During the year the firm earned a profit of Rs. 7,800. Showing your calculations Cleary, prepare ‘Profit and Loss Appropriation Account’ of Jay and Vijay for the year ended 31st March, 2014.

Solution

Continue ReadingOn 1st April, 2013, Jay and Vijay entered into partnership for supplying laboratory equipments to government schools situated in remote and backward areas. They contributed capitals of Rs. 80,000 and Rs. 50,000 respectively and agreed to share the profits in the ratio of 3: 2. The partnership Deed provided that interest on capital shall be allowed at 9% per annum. During the year the firm earned a profit of Rs. 7,800. Showing your calculations Cleary, prepare ‘Profit and Loss Appropriation Account’ of Jay and Vijay for the year ended 31st March, 2014.

Naresh and Sukesh are partners with capitals of Rs. 3,00,000 each as on 31st March, 2019. Naresh had withdrawn Rs. 50,000 against capital on 1st October, 2018 and also Rs. 1,00,000 besides the drawings against capital. Sukesh also had drawings of Rs. 1,00,000. Interest on capital is to be allowed @ 10% p.a. Net profit for the year was Rs. 2,00,000, which is yet to be distributed. Pass the Journal entries for interest on capital and distribution of profit.

Solution

Continue ReadingNaresh and Sukesh are partners with capitals of Rs. 3,00,000 each as on 31st March, 2019. Naresh had withdrawn Rs. 50,000 against capital on 1st October, 2018 and also Rs. 1,00,000 besides the drawings against capital. Sukesh also had drawings of Rs. 1,00,000. Interest on capital is to be allowed @ 10% p.a. Net profit for the year was Rs. 2,00,000, which is yet to be distributed. Pass the Journal entries for interest on capital and distribution of profit.

Ashish and Aakash are partners sharing profit in the ratio of 3: 2. Their Capital Accounts showed a credit balance of Rs. 5,00,000 and Rs. 6,00,000 respectively as on 31st March, 2019 after debit of drawings during the year of Rs. 1,50,000 and Rs. 1,00,000 respectively. Net profit for the year ended 31st March, 2019 was Rs. 5,00,000. Interest on capital is to be allowed @ 10% p.a. Pass the Journal entry for interest on capital and prepare Profit and Loss Appropriation Account.

Solution

Continue ReadingAshish and Aakash are partners sharing profit in the ratio of 3: 2. Their Capital Accounts showed a credit balance of Rs. 5,00,000 and Rs. 6,00,000 respectively as on 31st March, 2019 after debit of drawings during the year of Rs. 1,50,000 and Rs. 1,00,000 respectively. Net profit for the year ended 31st March, 2019 was Rs. 5,00,000. Interest on capital is to be allowed @ 10% p.a. Pass the Journal entry for interest on capital and prepare Profit and Loss Appropriation Account.

Anita and Ankita are partners sharing profits equally. Their capitals, maintained following Fluctuating Capital Accounts Method, as on 31st March, 2018 were Rs. 5,00,000 and Rs. 4,00,000 respectively. Partnership Deed provided to allow interest on capital @ 10% p.a. The firm earned net profit of Rs. 2,00,000 for the year ended 31st March, 2019. Pass the Journal entry for interest on capital.

Solution

Continue ReadingAnita and Ankita are partners sharing profits equally. Their capitals, maintained following Fluctuating Capital Accounts Method, as on 31st March, 2018 were Rs. 5,00,000 and Rs. 4,00,000 respectively. Partnership Deed provided to allow interest on capital @ 10% p.a. The firm earned net profit of Rs. 2,00,000 for the year ended 31st March, 2019. Pass the Journal entry for interest on capital.

Simran and Reema are partners sharing profits in the ratio of 3: 2. Their capitals as on 31st March, 2018 were Rs. 2,00,000 each whereas Current Accounts had balances of Rs. 50,000 and Rs. 25,000 respectively interest is to be allowed @ 5% p.a. on balances in Capital Accounts. The firm earned net profit of Rs. 3,00,000 for the year ended 31st March, 2019. Pass the Journal entries for interest on capital and distribution of profit. Also prepare Profit and Loss Appropriation Account for the year.

Solution

Continue ReadingSimran and Reema are partners sharing profits in the ratio of 3: 2. Their capitals as on 31st March, 2018 were Rs. 2,00,000 each whereas Current Accounts had balances of Rs. 50,000 and Rs. 25,000 respectively interest is to be allowed @ 5% p.a. on balances in Capital Accounts. The firm earned net profit of Rs. 3,00,000 for the year ended 31st March, 2019. Pass the Journal entries for interest on capital and distribution of profit. Also prepare Profit and Loss Appropriation Account for the year.

Kamal and Kapil are partners having fixed capitals of Rs. 5,00,000 each as on 31st March, 2018. Kamal introduced further capital of Rs. 1,00,000 on 1st October, 2018 whereas Kapil withdrew Rs. 1,00,000 on 1st October, 2018 out of capital. Interest on capital is to be allowed @ 10% p.a. The firm earned net profit of Rs. 6,00,000 for the year ended 31st March, 2019. Pass the Journal entry for interest on capital and prepare Profit and Loss Appropriation Account.

Solution

Continue ReadingKamal and Kapil are partners having fixed capitals of Rs. 5,00,000 each as on 31st March, 2018. Kamal introduced further capital of Rs. 1,00,000 on 1st October, 2018 whereas Kapil withdrew Rs. 1,00,000 on 1st October, 2018 out of capital. Interest on capital is to be allowed @ 10% p.a. The firm earned net profit of Rs. 6,00,000 for the year ended 31st March, 2019. Pass the Journal entry for interest on capital and prepare Profit and Loss Appropriation Account.