Q1 – Anand and Balan entered into a partnership contributing Rs.50,000 and Rs.30,000 respectively.They decided to share profits and losses in the ratio of 2:1. Anand was entitled to a salary of Rs.5000 p.a. Interest on capital was to be provided @6% p.a. The drawings of Anand and Balan for the year ending Dec.31,2015 were Rs.6,000 and Rs.5,000 respectively. Interest on drawings , Anand Rs.300 and Balan Rs.200 to be charged.The profit of the firm after providing for Anand’s salary and Interest on capital and taking into account interest on drawings were Rs.15,000.
Prepare the capital accounts of partners assuming that they maintaining the accounts according to
a) Fixed capital methods
b) Fluctuating capital method
Ans : a) Capital A/c balances – Anand – 50,000, Balan – 30.000. Current A/c Anand – 11,700, Balan – 1,600
b) Capital A/c – Anand – 61,700 , Balan – 31,600
Q2 – Ajith and Sajith entered in to a partnership agreement on 1st April 2010 with capital contribution of Rs.20,000 and Rs.40,000 respectively.They agreed up on the following terms and conditions.
- Profits and losses to be shared equally
- Interest on capital @12%
- Annual salary to Ajith Rs.6,000
- Commission to sajith @ Rs.400 per month
- Interest on drawings @9% p.a
Ajith withdraw Rs.4000 on October 1,2010 and Sajith Rs.8000 on July 1,2010. Sajith has given a loan of Rs.12,000 on January 1.2011 to the firm.The profit of the firm after making all adjustments was Rs.16,000.
Prepare Capital Accounts of partners as on March 31, 2011 according to
a) Fixed capital method
b) Fluctuating capital Method.
Ans : a) Capital A/c – Ajith – 20,000, Sajith – 40,000, Current Accounts Ajith – 12,220, Sajith- 9240
b) Capital A/c s – Ajith
Note : If nothing has been mentioned about the rate of interest on loan given by partner interest @6% should be given to the partner who has advanced loan over and above capital contribution.
Q3 – Sameer and Yasmin are partners with capitals of Rs.15,00,000 and Rs. 10,00,000 respectively. They agreed to share profits in the ratio of 3:2. Show how the following transactions will be recorded in the capital accounts of the partners in case: (i) the capitals are fixed, and (ii) the capitals are fluctuating. The books are closed on March 31, every year.
Prepare Capital Accounts of Partners as
a)Fixed capital method and
b)Fluctuating capital method.
Ans : a) Capital Accounts – Sameer – 18,00,000, yasmin – 12,00,000. Current A/cs Sameer – 1,40,700 , Yasmin – 80,800
b) Capital A/c Sameer – 19,40,700, Yasmin – 12,80,800
Q4 – Amit, Babu and Charu set up a partnership firm on April 1, 2019. They contributed Rs. 50,000, Rs. 40,000 and Rs. 30,000, respectively as their capitals and agreed to share profits and losses in the ratio of 3 : 2 :1. Amit is to be paid a salary of Rs. 1,000 per month and Babu, a Commission of Rs. 5,000. It is also provided that interest to be allowed on capital at 6% p.a. The drawings for the year were Amit Rs. 6,000, Babu Rs. 4,000 and Charu Rs. 2,000. Interest on drawings of Rs. 270 was charged on Amit’s drawings, Rs. 180 on Babu’s drawings and Rs. 90, on Charu’s drawings. The net profit as per Profit and Loss Account for the year ending March 31, 2020 was Rs. 35,660. Prepare the Profit and Loss Appropriation Account to show the distribution of profit among the partners.
Ans :Share of profit transferred to Capital accounts -Amit 6,000 Babu 4,000, Charu 2,000