Doubts

Mandeep, Vinod and Abbas are partners sharing profits and losses in the ratio of 3: 2: 1. From 1st April, 2022 they decided to share profits equally. The Partnership Deed provides that in the event of any change in profit-sharing ratio, goodwill shall be valued at three years’ purchase of average profit of last five years. The profits and losses of past five years are: Profit: Year ended 31st March, 2018: Rs. 1,00,000; 2019: Rs. 1,50,000; 2021: Rs. 2,00,000; 2022: Rs. 2,00,000. Loss: Year ended 31st March, 2020: Rs. 50,000. Pass the Journal entry showing the working.

SOLUTION

Continue ReadingMandeep, Vinod and Abbas are partners sharing profits and losses in the ratio of 3: 2: 1. From 1st April, 2022 they decided to share profits equally. The Partnership Deed provides that in the event of any change in profit-sharing ratio, goodwill shall be valued at three years’ purchase of average profit of last five years. The profits and losses of past five years are: Profit: Year ended 31st March, 2018: Rs. 1,00,000; 2019: Rs. 1,50,000; 2021: Rs. 2,00,000; 2022: Rs. 2,00,000. Loss: Year ended 31st March, 2020: Rs. 50,000. Pass the Journal entry showing the working.

X, Y and Z are partners sharing profits and losses in the ratio of 5: 3: 2. From 1st April, 2022, they decided to share profits and losses equally. The Partnership Deed provides that in the event of any change in the profit-sharing ratio, the goodwill should be valued at two years’ purchase of the average profit of the preceding five years. The profits and losses of the preceding years ended 31st March, are:

 Year 201820192020 20212022 Profits (Rs.)   70,000 75,000 55,000 35,00010,000 (Loss) You are required to calculate goodwill and pass journal entry. SOLUTION

Continue ReadingX, Y and Z are partners sharing profits and losses in the ratio of 5: 3: 2. From 1st April, 2022, they decided to share profits and losses equally. The Partnership Deed provides that in the event of any change in the profit-sharing ratio, the goodwill should be valued at two years’ purchase of the average profit of the preceding five years. The profits and losses of the preceding years ended 31st March, are:

Asha, Nisha and Disha shared profits and losses in the ratio of 3: 2: 1 respectively. With effect from 1st April, 2022, they agreed to share profits equally. The goodwill of the firm was valued at Rs. 18,000. Pass necessary Journal entries to record the above change.

SOLUTION

Continue ReadingAsha, Nisha and Disha shared profits and losses in the ratio of 3: 2: 1 respectively. With effect from 1st April, 2022, they agreed to share profits equally. The goodwill of the firm was valued at Rs. 18,000. Pass necessary Journal entries to record the above change.

Ashok, Bhim and Chetan are sharing profits and losses in the ratio of 5: 3: 2. With effect from 1st April, 2022, they decide to share profits and losses in the ratio of 5: 2: 3. Calculate each partner’s gain or sacrifice due to the change in ratio.

SOLUTION Old Ratio (Ashok, Bhim and Chetan) = 5: 3: 2New Ratio (Ashok, Bhim and Chetan) = 5: 2: 3 Sacrificing (or Gaining) Ratio = Old Ratio − New RatioAshok’s share = 5 / 10 –…

Continue ReadingAshok, Bhim and Chetan are sharing profits and losses in the ratio of 5: 3: 2. With effect from 1st April, 2022, they decide to share profits and losses in the ratio of 5: 2: 3. Calculate each partner’s gain or sacrifice due to the change in ratio.

Om and Shyam are sharing profits and losses equally. With effect from 1st April, 2022, they agree to share profits in the ratio of 4: 3. Calculate individual partner’s gain or sacrifice due to the change in ratio.

SOLUTION Old Ratio (Om and Shyam) = 1: 1New Ratio (Om and Shyam) = 4: 3 Sacrificing (or Gaining) Ratio = Old Ratio − New RatioOm’s share = 1 /…

Continue ReadingOm and Shyam are sharing profits and losses equally. With effect from 1st April, 2022, they agree to share profits in the ratio of 4: 3. Calculate individual partner’s gain or sacrifice due to the change in ratio.

Three Chartered Accountants Abhijit, Baljit and Charanjit form a partnership, profits being shared in the ratio of 3: 2: 1 subject to the following: (a) Charanjit’s share of profit guaranteed to be not less than Rs. 15,000 p.a. (b) Baljit gives a guarantee to the effect that gross fee earned by him for the firm shall be equal to his average gross fee of the preceding five years when he was carrying on profession alone, which on an average works out at Rs. 25,000. The profit for the first year of the partnership are Rs. 75,000. The gross fee earned by Baljit for the firm is Rs. 16,000. You are required to show Profit and Loss Appropriation Account after giving effect to the above.

SOLUTION

Continue ReadingThree Chartered Accountants Abhijit, Baljit and Charanjit form a partnership, profits being shared in the ratio of 3: 2: 1 subject to the following: (a) Charanjit’s share of profit guaranteed to be not less than Rs. 15,000 p.a. (b) Baljit gives a guarantee to the effect that gross fee earned by him for the firm shall be equal to his average gross fee of the preceding five years when he was carrying on profession alone, which on an average works out at Rs. 25,000. The profit for the first year of the partnership are Rs. 75,000. The gross fee earned by Baljit for the firm is Rs. 16,000. You are required to show Profit and Loss Appropriation Account after giving effect to the above.

Asgar, Chaman and Dholu are partners in a firm. Their Capital Accounts stood at Rs. 6,00,000; Rs. 5,00,000 and Rs. 4,00,000 respectively on 1st April, 2021. They shared Profits and Losses in the proportion of 4: 2: 3. Partners are entitled to interest on capital @ 8% per annum and salary to Chaman and Dholu @ Rs. 7,000 per month and Rs. 10,000 per quarter respectively as per the provision of the Partnership Deed. Sholu’s share of profit (excluding interest on capital but including salary) is guaranteed at a minimum of Rs. 1,10,000 p.a. Any deficiency arising on that account shall be met by Asgar. The profit for the year ended 31st March, 2021 amounted to Rs. 4,24,000. (Delhi 2013, Modified). Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2022.

SOLUTION

Continue ReadingAsgar, Chaman and Dholu are partners in a firm. Their Capital Accounts stood at Rs. 6,00,000; Rs. 5,00,000 and Rs. 4,00,000 respectively on 1st April, 2021. They shared Profits and Losses in the proportion of 4: 2: 3. Partners are entitled to interest on capital @ 8% per annum and salary to Chaman and Dholu @ Rs. 7,000 per month and Rs. 10,000 per quarter respectively as per the provision of the Partnership Deed. Sholu’s share of profit (excluding interest on capital but including salary) is guaranteed at a minimum of Rs. 1,10,000 p.a. Any deficiency arising on that account shall be met by Asgar. The profit for the year ended 31st March, 2021 amounted to Rs. 4,24,000. (Delhi 2013, Modified). Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2022.

P, Q and R entered into partnership on 1st April, 2018 to share profits and losses in the ratio of 12: 8: 5. It was provided that in no case R’s share in profit be less then Rs. 30,000 p.a. The profits and losses for the period ended 31st March were: 2020 Profit Rs. 1,20,000 2021 Profit Rs. 1,80,000; 2022 Loss  Rs. 1,20,000. Pass the necessary Journal entries in the books of the firm.

SOLUTION

Continue ReadingP, Q and R entered into partnership on 1st April, 2018 to share profits and losses in the ratio of 12: 8: 5. It was provided that in no case R’s share in profit be less then Rs. 30,000 p.a. The profits and losses for the period ended 31st March were: 2020 Profit Rs. 1,20,000 2021 Profit Rs. 1,80,000; 2022 Loss  Rs. 1,20,000. Pass the necessary Journal entries in the books of the firm.

Ashmit, Abbas and Karman are partners sharing profits in the ratio of 3: 2: 1. Abbas is guaranteed minimum profit of Rs. 1,50,000 per annum. The firm incurred loss for the year ended 31st March, 2022 of Rs. 30,000. Prepare Profit & Loss Appropriation Account for the year.

SOLUTION

Continue ReadingAshmit, Abbas and Karman are partners sharing profits in the ratio of 3: 2: 1. Abbas is guaranteed minimum profit of Rs. 1,50,000 per annum. The firm incurred loss for the year ended 31st March, 2022 of Rs. 30,000. Prepare Profit & Loss Appropriation Account for the year.