4Marks Questjons

Jain, Gupta and Singh were partners in a firm. Their fixed capitals were
Jain 4,00,000, Gupta 6,00,000 and Singh10,00,000. They were sharing profits
in the ratio of their capitals. The firm was engaged in the processing and
distnibution of flavoured milk. The partnership deed provided for interest on
capital at 10% per annum. During the year ended 31st March, 2014 the firm
earnèd a profit of 71,47,000.
Showing your working notes clearly. prepare profit and loss appropriation accoünt
of the firm. (Foreign 2015
Ans. Profit and Loss Appropriation Account
for the year ended 31st March, 2014
Particulars Amt ) Particulars Amt (R).
To ingerest on Capitai A/cs By Net Profit as per Profit and Loss /c 1,47,000
Jain's Current A/c 29,400
Gupta's Current A/c 4,100
Singh's Current A/c 13.5001,47,000
1,47.000 1,47,000

Working Note
Calculation of Interest on Capital
10
Jain=4,00,000x 40,000
100
10
Gupta =
6,00,000 x 60,000
100

Singh = 10,00,000 x 10 = 1,00,000

100
2,00,000
 LM and N were partners in firm sharing profits in the ratio of 3:4:5/ Their fixed
capitals were LR 4,00,000, M ?5,00,000 and N 7 6,00,000 respectively. The
partnership deed provided for the following
0) Interest on capital @ 6% per annum.
ii) Salary bf 30,000 per annum to N.
(ii) Interest on partner's drawings will be charged 12% per annum.
Düring the year ended 31st March, 2008 the firm earned a profit of7 2,70,000.
L withdrew ? 10,000 on 1st April, 2008, M withdrew ?
12,000 on 31st September
2008 and N withdrew 15,000 on 31st December, 2008.
Prepare profit and loss appropriation account for the year ended 31st March.
2009 (All India 2010)
Profit and Loss Appropriatlon Account
D for the year ending 31st March, 2009 Cr
Particulars Amt ( Particulars Amt
To Interest on Capital A/cs 6y Net Profit asper Profit and Loss A/c 2.70.000
l's Curent A/c 24,000 By Interest on Drawings A/c
M's Current c 30,000 L's Currept A/c 1.209
N's Current A/¢ 36,000 90,000 M's Current A/ 20
Jo Salary Ac N's Curent A/c 450 2.370
N'sCurrent A/c 30,000
To Profit Transferred to
Curent AM¢ 38,092.50
M's Current A/c 50,790.00
N's Current A/c 63,487.501,52:370
2,72,370 2.72.370
Working Note
() As capitals are fixed, therefore interest, salary and share of profit will be transferred to partners'
current accounts.
(i) Calculation of intefest on drawings
L=10,000 xxl= ?1,200; M =12000x x=?
100 12 720

N=15,009 100 12 x= 450

(ii) Calculationof interest on capitals
6
L=4,00,000,x=7 24,000; M 500,000 x 7 39,000
.
100 100

N=6,00,000 x 36,000
100
 firm sharing profit and lossés in the ratio of 3 2 The
5.A and B are partners in
a
sheet of the firm as at 31st March, 2010.
following was the balance
Balance Sheet
as dt 31st March, 2010

Amt () Assets Amt (

Liabilities
Sundry Assets 80.000
Capital A/cs
A 60.000
B 20,000 80,000
80,000 E0.000
The profits 30,000 for the year ended 31st March, 2010 were divided between
to
the partners without allowing interest on capital @ 12% per annum and salary
A@R 1,000 per month. During the year, A withdrew? 10,000 and B 20,000.
Pass the necessary adjustment journal entry and show your working clearly
Ans. JOURNAL (Delhi 2011)

D Particulars LF Amt (Dr) Amt (Cr

B's Capital A/c Dr 5.280

ToA's Capital A/c 5280
(Being interest on capital and salary to A noticharged previously, now adjusted)

Working Note
) Calculation of Opening Capital
Particulars A B

Ciosing Capital 60.000 20.000

+) Drawings 10,000 20.000
70,000 40 000
-Profit (32 (18.000) (12,00
Capital in the Beginning
52,000 28.C00
Calculation of interest on
capital
A 52 000x =? 6,240 B 28,000x =7 3,360
100 100
() Calculation of Amount to be Adjusted
Particulars A (R) BR) Total
.Amount already Recorded
Profit Wrongly Distributed (30,000 in 3:2)
18.000 12,000 39,000
I.Amount which should have been Recorded
Interest on Capital
Salary to A
6,240 3.360 9,60)
Profits(8,400 in 3:2)
12,000 12.00)
5.040 3,360 8,.40
23,280 6.720 30,00
Net Effect (1- I 17
5,280 (C 5,280(Dr) N
 Calculation of Adjusted Proflt
30,000-9,600 (Interest on Capital) -12,000 (Salary)
8,400
6. A. B, Cand D are partners sharing profits
and losses in the ratio of 4 3 3 2. Their
respective fixed capitals on 31st March, 2010 were 60,000, ? 90,000, 7 1,20,000
and90,000 respectively. After preparing the final accounts for thee year ende
31st March, 2010, it was discovered that interest on
capital @ 12"% per annum was
not allowed and interest on drawings amounting to ? 2.000, 2.500, ? 1,500 and
1,000 respectively was also
not charged.
Pass the necessary adjustment journal entry showing your working clearly
All India 2011)
Ans JOURNAL
Date Particulars LFAmt (Dr Amt (Cr
As Current A/c Dr 6,867
6's Current A/c Dr 750
To C's Current A/c 3.850
To D's Current A/c 3.767
(Being interest on capital and drawings previously not recorded,
now adjusted)
Working Note
Calculatlon of Amount to be Adjusted
Particulars A () B (7) C (7) DR) Total
Amount which should have been Recorded
Interest on Capital 7,200 10.800 14,400 10.800 43.200
Interest on Drawings (2,000) (7.000
(2.500) (1.500) 1.000)
5,200 8,300 12,900 9.800 36.200
Amount already Recorded
Loss(4 3:3 2) 12,067 9,050 9.050 6.033 36.200
Net Eftect 6,867 (Dr 750 (Dr)3850(C 3,767(C Nil
5 A. B and C were partners in a firm. On 1st April, 2008, their fixed capitals stood at
50,000, 725,006 and 7 25.000 respectively.
As per the provisians of the partnership deed
) B was entitled fora salary of 5,000 per annum.
5% per annum.
i) All the partners were entitled to interest on capital at
iProhts were to be shared in the ratio of capitals and
The net profit for the year ending 31st March, 2009 of 7 33,000
for the above
31stMarch, 2010 of 45,000 was divided equally without providing
terms.
above (All India 201)
Pass an adjustment journal entry to rectify the error.
 dpers ACCOuntancy

Ans. JOURNAL
Amt (Dr Amt Cn
Date Particulars
9O000
CsCurem At
8000
To A's Currernt A/t
O00
To B's Currenm AVt
Being interest on capital and salary not provsed previously and profit
distributed wrongly rew adjustedi

Werking Note
Calculation of Amount to be Adjusted
fotal
Part uars
Amoum lready Recorded

318t March 2009 11 000 11 000 11O00

Profn( 11
31st March 2010 15.000 15.000 15.000 45.000
26.000 26.000 18 00
26.000
Amoum which should have been Recorded

Salary 31st March, 2009 5.000

31st March. 2010 5.000
31st March, 2009 2.500 1.250 1.250 5.00
interest on Capitel
31st March. 2010 2.500 1.250 1.250 5.00
31st March 2009 11,500 5,750 5.750 23.000
Protrts to be Shared
1) 31st March,2010 17.500 8.750 8,750 35.000
ancapital ratio ie 2:1
34.000 27.000 17.000 78.000

Net Eftect (- 8.000 (C) 1.000(Cr) 9,000 (Dr) Nil

(i Calculation of Adjusted Profit

3ist March, 2009 33000-,000 (Salary)-5,000 (lnterest on capital)
= 23,000
31stMarch, 2010 45,000- 5000 (Salary) - 5000 (Interest on capital)

35,000

8. A, B and C were partners. Their capitals were 30,000, 20.000 and ? 10,000
respectively. According to the partnership deed, they were entitled to interest on
capital@5%per annum. In addition, B was also entitled to draw a salary of 7 500
C
per month was entitled to a commission of 5% on the profits after charging the
interest
on charging the salary payable to B. The net proñts for
capitals but before
the year were? 30,000 distributed in the ratio of their capitals without providing tor
anyofthe above adjustments. The profits were to be shared in the ratio of 2 :2:1.
Pass the necessary
adjustment entry showing the working clearly (Delhi 2010)