Doubts

A, B and C were partners in a firm having capitals of Rs. 50,000; Rs. 50,000 and Rs. 1,00,000 respectively. Their Current Account balances were A: Rs. 10,000; B: Rs. 5,000 and C: Rs. 2,000 (Dr.). According to the Partnership Deed the partners were entitled to an interest on Capital @ 10% p.a. C being the working partner was also entitled to a salary of Rs. 12,000 p.a. The profits were to be divided as: (a) The first Rs. 20,000 in proportion to their capitals. (b) Next Rs. 30,000 in the ratio of 5: 3: 2. (c) Remaining profits to be shared equally. The firm earned net profit of Rs. 1,72,000 before charging any of the above items. Prepare Profit and Loss Appropriation Account and pass necessary Journal entry for the appropriation of profits.

SOLUTION

Continue ReadingA, B and C were partners in a firm having capitals of Rs. 50,000; Rs. 50,000 and Rs. 1,00,000 respectively. Their Current Account balances were A: Rs. 10,000; B: Rs. 5,000 and C: Rs. 2,000 (Dr.). According to the Partnership Deed the partners were entitled to an interest on Capital @ 10% p.a. C being the working partner was also entitled to a salary of Rs. 12,000 p.a. The profits were to be divided as: (a) The first Rs. 20,000 in proportion to their capitals. (b) Next Rs. 30,000 in the ratio of 5: 3: 2. (c) Remaining profits to be shared equally. The firm earned net profit of Rs. 1,72,000 before charging any of the above items. Prepare Profit and Loss Appropriation Account and pass necessary Journal entry for the appropriation of profits.

Calculate the amount of Manan’s monthly drawings for the year ended 31st March, 2022, in the following alternative cases when Partnership Deed allows interest on drawings @10% p.a. : (i) If interest on drawings is Rs. 1,950 and he withdrew a fixed amount in the beginning of each month. (ii) If interest on drawings is Rs. 2,400 and he withdrew a fixed amount in the middle of each month. (iii) If interest on drawings is Rs. 2,750 and he withdrew a fixed amount at the end of each month.

SOLUTION (i) If interest on drawings is Rs. 1,950 and he withdrew a fixed amount in the beginning of each month.Interest on drawings @ 10% p.a.Average month 6.5Annual amount of…

Continue ReadingCalculate the amount of Manan’s monthly drawings for the year ended 31st March, 2022, in the following alternative cases when Partnership Deed allows interest on drawings @10% p.a. : (i) If interest on drawings is Rs. 1,950 and he withdrew a fixed amount in the beginning of each month. (ii) If interest on drawings is Rs. 2,400 and he withdrew a fixed amount in the middle of each month. (iii) If interest on drawings is Rs. 2,750 and he withdrew a fixed amount at the end of each month.

The capital accounts of Tisha and Divya showed credit balances of 10,00,000 and 7,50,000 respectively after taking into account drawings and net profit of Rs. 5,00,000. The drawings of the partners during the year 2021-22 were:(i) Tisha withdrew 25,000 at the end of each quarter.(ii) Divya’s drawings were:

31st May, 2021Rs. 20,0001st November, 2021Rs. 17,5001st February, 2022Rs. 12,500 Calculate interest on partners' capitals@ 10% p.a. and interest on partners' drawings@ 6% p.a. for the year ended 31st March,…

Continue ReadingThe capital accounts of Tisha and Divya showed credit balances of 10,00,000 and 7,50,000 respectively after taking into account drawings and net profit of Rs. 5,00,000. The drawings of the partners during the year 2021-22 were:(i) Tisha withdrew 25,000 at the end of each quarter.(ii) Divya’s drawings were:

Calculate interest on drawings of Ashok @ 10% p.a. for the year ended 31st March, 2022, 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 is…

Continue ReadingCalculate interest on drawings of Ashok @ 10% p.a. for the year ended 31st March, 2022, 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.

Abha, Bobby and Vineet are partners sharing profits and losses equally. As per Partnership Deed, Vineet is entitled to a commission of 10% on the net profit after charging such commission. The net profit before charging commission is Rs. 2,20,000.Determine the amount of commission payable to Vineet.

SOLUTION Net Profit before charging Commission = Rs. 2,20,000Commission to Vineet = 10% of on Net Profit after charging such commissionPartner' s Commission = (Net profit × Rate of commission) /  (100+Rate of commission)Vineet's…

Continue ReadingAbha, Bobby and Vineet are partners sharing profits and losses equally. As per Partnership Deed, Vineet is entitled to a commission of 10% on the net profit after charging such commission. The net profit before charging commission is Rs. 2,20,000.Determine the amount of commission payable to Vineet.

Shiv, Mohan and Gopal are partners sharing profits and losses in the ratio of 2: 2: 1 respectively. Shiv is entitled to a commission of 10% on the net profit. Net profit for the year is Rs. 1,10,000. Determine the amount of commission payable to Shiv.

SOLUTION Net Profit before charging commission = Rs. 1,10,000Commission to Shiv = 10% of on Net Profit before charging such commission  Partner' s Commission = (Net profit × rate of commission) / 100Shiv ' s Commission…

Continue ReadingShiv, Mohan and Gopal are partners sharing profits and losses in the ratio of 2: 2: 1 respectively. Shiv is entitled to a commission of 10% on the net profit. Net profit for the year is Rs. 1,10,000. Determine the amount of commission payable to Shiv.

A and B are partners in the ratio of 3: 2. The firm maintains Fluctuating Capital Accounts and the balance of the same as on 31st March, 2020 amounted to Rs. 1,60,000 and Rs. 1,40,000 for A and B respectively. Their drawings during the year were Rs. 30,000 each. As per Partnership Deed, interest on capital@10% p.a. on opening capitals had been provided to them. Calculate opening capitals of partners given that their profit was Rs. 90,000. Show your workings clearly.

SOLUTION

Continue ReadingA and B are partners in the ratio of 3: 2. The firm maintains Fluctuating Capital Accounts and the balance of the same as on 31st March, 2020 amounted to Rs. 1,60,000 and Rs. 1,40,000 for A and B respectively. Their drawings during the year were Rs. 30,000 each. As per Partnership Deed, interest on capital@10% p.a. on opening capitals had been provided to them. Calculate opening capitals of partners given that their profit was Rs. 90,000. Show your workings clearly.

Vinod and Mohan are partners. Vinod ‘s Capital is Rs. 1,00,000 and Mohan ‘s Capital is Rs. 60,000. Interest on capital is payable @6% p.a. Mohan is entitled to a salary of Rs. 3,000 per month. Profit for the current year before interest and salary to Mohan is Rs. 80,000.Prepare Profit and Loss Appropriation Account.

SOLUTION Working Notes:WN1Calculation of Interest on Capital Interest on Vinod’s loan = 1,00,000 × 6 / 100 × 6 / 12 = 6,000Interest on Mohan's loan = 60,000 × 6 / 100…

Continue ReadingVinod and Mohan are partners. Vinod ‘s Capital is Rs. 1,00,000 and Mohan ‘s Capital is Rs. 60,000. Interest on capital is payable @6% p.a. Mohan is entitled to a salary of Rs. 3,000 per month. Profit for the current year before interest and salary to Mohan is Rs. 80,000.Prepare Profit and Loss Appropriation Account.

Ankit, Bhanu and Charu are partners in a firm sharing profits and losses equally with capital of Rs. 2,50,000 each. On 1st October, 2021, Ankit and Bhanu gave loans of Rs. 2,50,000 each to the firm whereas Charu took a loan of Rs. 1,00,000 from the firm on the same date. It was agreed among the partners that Charu will be charged Interest @ 6% pa. Interest on loan from partners was paid on 10th April, 2022.The firm closes its books on 31st March each year. Pass the Journal entries in the books of the firm for the year ended 31st March, 2022.

SOLUTION

Continue ReadingAnkit, Bhanu and Charu are partners in a firm sharing profits and losses equally with capital of Rs. 2,50,000 each. On 1st October, 2021, Ankit and Bhanu gave loans of Rs. 2,50,000 each to the firm whereas Charu took a loan of Rs. 1,00,000 from the firm on the same date. It was agreed among the partners that Charu will be charged Interest @ 6% pa. Interest on loan from partners was paid on 10th April, 2022.The firm closes its books on 31st March each year. Pass the Journal entries in the books of the firm for the year ended 31st March, 2022.