Partnership Accounts - Fundamentals

Q1 D, E and F started a partnership firm on April 1, 2014. They contributed Rs,

5,00,000, Rs. 4,00,000 and Rs. 3,00,000 respectively as their capitals. The
partnership provides that D is to be paid a salary of Rs. 10,000 per month and E a
commission of Rs. 50,000. It also provides that interest on capital be allowed @6%
p.a. but does not provide anything for profit sharing ratio. The drawings for the year
were D Rs. 60,000; E Rs. 40,000 and F Rs. 20,000. Interest on drawings was
charged as Rs. 2,700 on D’s drawings, Rs. 1,800 on E’s drawings and Rs. 900 on F’s
drawings. The net amount of profit as per Profit and Loss Account for the year 2014-
15 was Rs. 3,56,600.Record necessary journal entries

Q2.A and B started a partnership business on 1st April, 2003. They contributed
Rs.12,00,000 and Rs.8,00,000 respectively as their capitals. On 1st July 2003 A
introduced Rs 2,00,000 and B withdraw Rs 2,00,000 on 1st Oct 2003. The terms of
the partnership agreement are as under
(i) Interest on capital and drawings @ 6% per annum.
(ii) B is to get a monthly salary of Rs. 5,000.
(iii) Sharing of profit or loss will be in the ratio of their capital contribution.
The profit for the year ended 31st March, 2004, before making above appropriations
was Rs.4,14,800. The drawings of A and B were Rs. 96,000 and Rs. 80,000
respectively. Interest on drawings amounted to Rs. 3,000 for A and Rs. 2,200 for B.
Prepare profit and loss appropriation account and partner’s capital accounts
assuming that their capitals are fluctuating. Journalize above as well.
Q3 X and Y are partners with capitals of Rs. 2,00,000 and Rs. 1,60,000 respectively
on 1st April, 2013 and their PSR is 2:1. Interest on capital is agreed 12% p.a. Y is to
be allowed an annual salary of Rs. 12,000. The profit for the year 31st March, 2014
amounted to Rs. 1,00,000 before providing Manager commission which is 10 % of
the profits.Prepare Profit and Loss Appropriation Account and Capital Accounts.

Q4 P and Q and partners sharing profits in the ration of 3:2.P is a non-working

partner. He contributed Rs. 5,00,000 as his capital. Q did not contribute any capital.
The partnership deed provides interest on capital @ 10% p.a. and salary to Q as Rs.
2,500 p.m. The net profit before providing interest on capital and salary amounts to
Rs.40,000 for the year ended 31st March, 2009. Show the distribution of profit for
the years.
Q5 Y and Z are partners with capitals of Rs. 50,000 and Rs. 30,000 respectively 1st
April, 2013. Each partner is entitled to 9% p.a. interest on his capital. Z is entitled to
a salary of Rs. 12,000 p.a. together with a commission of 6% of Net Profit remaining
After deducting interest on capitals and salary and after charging his commission.
The Profit for the year ended 31st March, 2014 before making any of the above
mentioned adjustment amount to Rs. 61,600. Prepare Partner’s Capital Accounts :
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(i) when capitals are fixed, and (ii) when capitals are fluctuating.
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EDUCOMMERCE ACADEMY; 59, FIRST FLOOR, POCKET 13 SECTOR 24, ROHINI

Q6 A and B are partners in a firm sharing profits or losses in the ratio of 2 : 3 with
capitals of Rs. 8,00,000 and Rs. 16,00,000 respectively on 1st April, 2010. Each
partner is entitled to 10% p.a. interest on his capital. B is entitled a commission of
10% on net profit remaining after deducting interest on capital but before charging
any commission. A is entitled a commission of 8% of net profit remaining after
deducting interest on capital and after charging all commissions. The profit for the
year ended 31st March, 2011 prior to calculation of interest on capital was Rs.
12,00,000. Prepare Profit and Loss Appropriation Account.
Q7 A, B and C were partners in a firm having capitals of Rs. 4,00,000; Rs. 4,00,000
and Rs. 1,60,000 respectively on 1st April, 2008. Their Current Account balances
were A: Rs. 40,000; B: Rs. 20,000 and C: Rs. 10,000 (Dr.). According to the
partnership deed the partners were entitled to interest on capital @ 10% p.a. B being
the working partner was also entitled to a salary of Rs. 12,000 per quarter. The
profits were to be divided as follows :
(a) The first Rs. 1,20,000 in proportion to their capitals.
(b) Next Rs. 2,00,000 in the ratio of 4 : 3 : 1.
(c) Remaining profits to be shared equally.
The firm made a profit of Rs. 5,60,000 for the year ended 31st March, 2009 before
charging any of the above items. Prepare the Profit & Loss Appropriation Account
and pass necessary journal entry for apportionment of profits.
Q8 Poorab and Anchal are partners in a firm sharing profits and losses in the ratio
of 2:1. Their capital accounts as on 1st April, 2013 stand at Rs. 70,000 and Rs.
30,000 respectively. The partners are allowed interest on capital @ 10% p.a. The
drawings of the partners during the year ended 31st March, 2014 amounted to Rs.
4,800 and Rs. 3,600 respectively. Interest is charged on drawings at the rate of 10%
p.a. Poorab has given a loan to firm as on 1st November, 2013 of Rs. 20,000. The
profit of the firm for the year ended 31st March, 2014 before above adjustments was
Rs. 80,000. 10% of this profit is to be kept in a Reserve Account. Current A/c
balances on 1st April, 2013 were Poorab Rs. 5,000 (Cr.); Anchal Rs. 23,000 (Dr.)
Prepare Profit and Loss Appropriation Account and Partner’s Current Accounts.
Q9 L and M are partners with capitals of Rs. 3,00,000 and Rs. 2,00,000 respectively
sharing profits as L 70% and M 30%. During the year ended 31 March 2005 they
earned a Net profit of Rs. 2,26,440 before allowing interest on partner’s loan. The
terms of partnership are as follows:
(i) Interest on Capital is to be allowed @ 7% p.a.
(ii) L to get a salary of Rs. 2,500 per month.
(iii) Interest on M’s Loan account of Rs. 80,000 for an average of six months.
(iv) Interest on drawings of at 8%. Drawings being L Rs. 36,000 and M Rs. 48,000.
(v) 1/10th of the distributable profit should be transferred to General Reserve.
Prepare the Profit and Loss Appropriation Account.
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EDUCOMMERCE ACADEMY; 59, FIRST FLOOR, POCKET 13 SECTOR 24, ROHINI

Q10 P and Q are partners sharing profits and losses in the ratio of 60 : 40. On 1st
April, 2014, their capitals were : P - Rs. 10,00,000 and Q - Rs. 6,00,000. During the
year ended 31st March, 2015, they earned a net profit of Rs. 15,20,000. The terms of
partnership are :
(i) Interest on the capital is to be charged @ 8% p.a.
(ii) P will get commisson @ 3% on turnover.
(iii) Q will get a salary of Rs. 10,000 per month and he also gets a commission of 5%
on profits after deduction of interest, salary and commission (including his own
commission).
(v) P is entitled to a rent of Rs. 40,000 per month for the use of his premises by the
firm. It is paid to him by cheque at the end of every month.
Partner’s drawings for the year were: P - Rs. 80,000 and Q - Rs. 60,000. Turnover for
the year was Rs. 40,00,000. After considering the above factors, you are required to
prepare the Profit and loss Appropriation Account and the Capital Accounts.
Q11 The partnership agreement between A and B provides that:
(i) A will be allowed a salary of Rs. 4,000 p.m;
(ii) B who manages the finance department will be allowed a commission equal to
10% of the net profits, after allowing A’s salary;
(iii) 7% interest will be allowed on partner’s fixed capital;
(iv) 5% interest will be charged on partner’s annual drawings;
(v) The fixed capitals of A and B are Rs. 10,00,000 and Rs. 8,00,000, respectively.
Their annual drawings were Rs. 1,60,000 and 1,40,000, respectively. The net profit
for the year ending March 31, 2006 amounted to Rs. 4,00,000.
Prepare firm’s Profit and Loss Appropriation Account.
Q12 X and Y are partners with capital of Rs 5,00,000 and Rs.2,50,000 respectively.
X is allowed an annual salary of Rs.50,000. Interest on capitals is agreed @ 10% p.a.
The profits for the year 2014 prior to allowing interest on capital but after charging
X' salary is Rs.5,00,000. A provision of 10 % of the profit is to be made in respect of
commission to manager. Prepare relevant account (s) to allocate profits.
Q13 A and B are partners sharing profits in the ratio of 3:2 with their capitals as Rs.
40,000 and Rs. 30,000 respectively. Interest on capital is allowed at 5% p.a. B is
allowed an annual salary of Rs. 3,000 which has not been withdrawn. During 1999,
the profits prior to calculation of interest on capital but after charging B’s salary
amounted to Rs. 12,000 A provision of 5% of profit is to be made in respect of
commission to the manager.
Show the distribution of profit of the firm. (C.B.S.E., AI 1999-C)
Q14 P, Q and R started a partnership firm. P contributed Rs60,000 for the whole
year; Q contributed Rs50,000 and after 6 months further introduced Rs20,000 as
capital. R invested Rs80,000 but withdrew Rs 20,000 at the end of 8th months.Profit
of the firm for the year was Rs 29,000. You are required to apportion the profit of the
firm in their capital ratio.
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Q15 Exe and Wye were partners in a firm. Exe is entitled to a salary with a commission
of 5% on Net Profit before charging any commission but after charging all salary. Wye
is entitled to a salary together with a commission of 20% on Net Profit after charging
all salaries and commissions.Exe is getting double salary from Wye. Fill in the missing
information/figures of following Profit and Loss Appropriation Account.
PROFIT AND LOSS APPROPRIATION ACCOUNT
for the year ended 31st March 2015
Particulars Rs. Particulars Rs.
To Exe's Capital A/c (Salary) ... By Profit & Loss A/c 15,00,000
To Wye's Capital A/c (Salary) ...
To Exe's Capital A/c (Commission) 39,000
To Wye's Capital A/c (Commission) ...
To Profit transferred to Partners
Capital A/c
Exe ...
Wye ... ...
15,00,000 15,00,000

Q16 A and B entered into partnership on 1 April 2014 without any partnership deed.
They introduced capitals of Rs.12,00,000 and Rs.4,00,000 respectively. Fill in the
missing information /figures in the following accounts.
PROFIT AND LOSS ACCOUNT
for the year ended 31st March 2015
Particulars Rs. Particulars Rs.
To Manager's Commission 8,000 By Net Profit ....
To ..... ....
.... ....

PROFIT AND LOSS APPROPRIATION ACCOUNT

for the year ended 31st March 2015
Particulars Rs. Particulars Rs.
To Interest on Capital By Profit & Loss A/c 8,30,000
A’s Capital A/c ….
B’s Capital A/c …. ....
To Profit transferred to Capital A/c
A’s Capital A/c ….
B’s Capital A/c …. ….

.... ....

Contd……
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EDUCOMMERCE ACADEMY; 59, FIRST FLOOR, POCKET 13 SECTOR 24, ROHINI

 PARTNER'S CAPITAL ACCOUNTS
Particulars A B Particulars A B
By Bank ... ....
By P & LAppropriation A/c ... ....
To Balance c/d ... ... By Interest on Capital 12,000 ….
…. ... ... ...

Q17 X and Y are partners sharing profits in the ratio 4 : 3. Interest on capital of both
the partner is agreed @ 6% p.a. During 2014-15. X had given Rs.2,00,000 by the way of
loan to the firm without any agreement on 30th Sep. 2014. Fill in the missing
information/figures in the following accounts:
PROFIT AND LOSS ACCOUNT
for the year ended 31st March 2015
Particulars Rs. Particulars Rs.
To .... ... By Net Profit ...
To Profit transferred to:
Profit and Loss Appropriation A/c ...
... ...

PROFIT AND LOSS APPROPRIATION ACCOUNT

for the year ended 31st March 2015
Particulars Rs. Particulars Rs.
To Interest on Capital By Profit & Loss ……
X's Capital A/c6,000
Y's Capital A/c 3,000 9,000
To X's Salary A/c ...
To Profit transferred to
X's Capital A/c 20,000
Y's Capital A/c ... ...
... ...

PARTNERS' CAPITAL ACCOUNTS

Particulars X Rs. Y Rs. Particulars X Rs. Y Rs.

By Balance b/d ... ...
ByInterest on Capital ... ...
By Partner’s Salary 20,000
To Balance c/d ... ... By Profit & Loss App. A/c … …
... ... ... ...
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EDUCOMMERCE ACADEMY; 59, FIRST FLOOR, POCKET 13 SECTOR 24, ROHINI

Interest on Drawings
Q18 Honey is a partner in a firm. He withdrew Rs. 2,000 p.m. regularly on the first
day of every month during the year ended 31st March, 2014 for personal expenses.
If interest on drawings is charged @ 15% pa.calculate the interest on the drawings.
Q19 Mr. Amar is a partner in a firm. He withdrew the following amounts during the
year ended 31st March, 2014 :—
Date Rs.
April 30 8,000
June 30 5,000
Sept. 30 5,000
Dec. 31 12,000
Jan. 31 10,000
Calculate interest on drawings @ 9% pa for the year ended on 31st March, 2014.
Q20 X, Y and Z are partners in a firm. You are informed that (i) X draws Rs. 8,000
from the firm at the beginning of every month, (ii) Y draws Rs. 8,000 from the firm at
the end of the every month, and (iii) Z draws Rs. 8,000 from the firm in the middle of
every month. Interest on drawings is to be charged @ 9% p.a. Calculate interest on
partner’s drawings.
Q21 Jack, a partner in a Partnership firm withdrew money during the year ending
March 31, 2015, for his personal use. Calculate interest in drawings in each of the
following alternative situations, if rate of interest is 10 per cent.
(a) If he withdrew Rs. 3,000 per month at the beginning of every month.
(b) If an amount of Rs. 3,000 per month was withdrawn by him at the end of each
month.
(c) If the amounts withdrawn were : Rs. 12,000 on June 01, 2014, Rs. 8,000 on
August 31, 2014, Rs. 3,000 on September 30, 2014, Rs. 7,000 on November 30,
2014, and Rs. 6,000 on January 31, 2015
Q22 A, B and C are partners in a firm sharing profits and losses equally. B and C
withdrew the following amounts from the firm, for their personal use, during 2015.
2015 B C
January, 01 5000 7000
April, 01 8000 4000
September, 01 5000 5000
December, 01 4000 9000
Calculate interest on drawings if the rate of interest to be charged is 10% , and the
books are closed on December 31 every year.
Q23 C and D are partners in a firm. The partnership agreement provides that
interest on drawings should be charged @ 6% p.a. C withdraws Rs. 2,000 per month
starting from April 01, 2014 to March 31, 2015. D withdrew Rs 3,000 per quarter,
starting from April 01, 2014. Calculate interest on partner’s drawings.
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EDUCOMMERCE ACADEMY; 59, FIRST FLOOR, POCKET 13 SECTOR 24, ROHINI

Q24 Calculate the interest on drawings of Mr. Singh @ 8% for the year ended 31st
March, 2007, in each of the following alternative cases :
Case (i) If he withdrew Rs. 10,000 in the beginning of each quarter.
(ii) If he withdrew Rs. 12,000 at the end of each quarter.
(iii) If he withdrew Rs. 20,000 during the middle of each quarter.
Q25 Jazz is a partner in a firm. He drew regularly Rs. 1600 at the end of every
month for the six months ending 30th September, 2013. Calculate interest on
drawings at 15% p.a.
Q26 A, B and C started business on 1st July 2006. Calculate interest on drawings of
Mr. B @ 9% pa. for nine months ending 31st March, 2007 , if he withdrew Rs.
20,000 pm. At the end of every month.

Q27Calculate the interest on drawings of Sh. Alok @ 9% p.a. for the year 2007, in
each of the following alternative cases :
Case (i) If he withdrew Rs. 8,000 p.m. in the beginning of every month;
(ii) If he withdrew Rs.10,000 pm. at the end of every month;
(iii) If he withdrew Rs.12,000p.m; during the month
(iv) If he withdrew Rs. 4,32,000 during the year;
(v) If he withdrew as follows :
30th April 2006 20,000
01st July 2006 30,000
01st Oct 2006 32,000
30th Nov 2006 24,000
31st March 2007 40,000
(vi) If he withdrew Rs. 24,000 in the beginning of each quarter;
(vii) If he withdrew Rs. 36,000 at the end of each quarter;
(viii) If he withdrew Rs. 36,000 during the middle of each quarter.
Also calculate Interest on drawing if interest rate is 9% instead of 9% p.a.
Q28 Current Account’s Balances as on 1st April, 2013 were as: V : Rs. 10,000 (Cr.),
N : Rs. 4,000 (Cr.) and R : Rs. 2,000 (Dr.). Profit sharing ratio was 3: 2 : 1. V gets a
monthly salary of Rs. 3,000.V draws Rs. 4,000 on the first day of each month and N
draws Rs. 4,000 on the last date of each month while R draws Rs. 12,000 at the end
of each quarter. Interest on drawings is to be charged @ 12% Profits for the year
ended 31st March, 2014 before adjustments of interest on drawings and of salary
were Rs. 1,48,080. Show Current A/c’s and P&L Appropriation A/c

Interest on Capital
Q29 Mr. A and Mr. B are partners in a firm. Their capital accounts as on April 01.
2014 showed a balance of Rs. 2,00,000 and Rs. 3,00,000 respectively. On July 01,
2014, Mr. A introduced additional capital of Rs. 50,000 and Mr. B Rs. 60,000. On
October 01 Mr. A withdrew Rs. 30,000, and on January 01, 2015 Mr. B withdrew
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Rs. 15,000 from their capitals. Interest is allowed @ 8% p.a. Calculate interest
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payable on capital to both the partners during the financial year 2014–2015.

EDUCOMMERCE ACADEMY; 59, FIRST FLOOR, POCKET 13 SECTOR 24, ROHINI

Q30 Tapu and Bapu are partners sharing profits and losses in the ratio of 3:1. Their
capitals at the end of the financial year 2014-2015 were Rs. 1,50,000 and Rs.
75,000. During the year 2014-2015, Tapu’s drawings were Rs. 20,000 and the
drawings of Bapu were Rs. 5,000, which had been duly debited to partner’s capital
accounts. Profit before charging interest on capital for the year was Rs. 16,000. The
same had also been credited in their profit sharing ratio. Bapu had brought
additional capital of Rs. 16,000 on October 1, 2014. Calculate interest on capital @
12% p.a. for the year 2014-2015.
Q31 Asha and Niti are partners sharing profits and losses in the ratio of 3 : 2. Their
capital accounts showed balances of Rs. 1,50,000 and Rs. 2,00,000 respectively on
Jan 01, 2013. Show the treatment of interest on capital for the year ending
December 31, 2016 in each of the following alternatives:
(a) If the partnership deed is silent as to the payment of interest on capital and the
profit for the year is Rs. 50,000;
(b) If partnership deed provides for interest on capital @ 8% p.a. and the firm
incurred a loss of Rs. 10,000 during the year;
(c) If partnership deed provides for interest on capital @ 8% p.a. and the firm earned
a profit of Rs. 50,000 during the year;
(d) If the partnership deed provides for interest on capital @ 8% p.a. and the firm
earned a profit of Rs. 14,000 during the year.
Q32 Buddy and Saddy are in partnership with capitals of Rs, 80,000 and Rs.
60,000, respectively. During the year 2006-2007, Buddy withdrew Rs. 10,000 from
his capital and Saddy Rs. 15,000. Profit before charging interest on capital was Rs.
50,000. Buddy and Saddy shared profits in the ratio of 3:2. Calculate the amounts
of interest on their capitals @ 12% p.a. for the year ended March 31, 2007.
Q33 Preya and Kajal are partners in a firm, sharing profits and losses in the ratio of
5:3. The balance in their fixed capital accounts, on April 1, 2006 were: Preya Rs.
6,00,000 and Kajal Rs. 8,00,000. The profit of the firm for the year ended March 31,
2007 is Rs, 1,26,000. Calculate their shares of profits: (a) when there is no
agreement in respect of interest on capital and (b) when there is an agreement that
the interest on capital will be allowed @ 12% p.a.
Q34 A and B are partners in a firm. Their capitals as on 1st April, 2013 were Rs.
4,20,000 and Rs. 1,80,000 respectively. They share profits in the ratio of 2:1. On 1st
August, 2013, they decided that their capitals should be readjusted according to
their profit sharing ratio. The necessary adjustments in the capitals were made by
withdrawing or introducing cash. Interest on capital is allowed at 12% p.a. Compute
interest on capitals for the year ending on 31st March, 2014.
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Q35 X and Y started a partnership business on 1st April, 2011. They contributed
80,000 and 60,000 respectively as their capitals. On 1st Oct, 2011, X granted a loan
of 20,000. The terms of the partnership agreement are as follows:
 20% of Profits after making appropriations to be transferred to General Reserve.
 Interest on Capital @ 12% p.a. and Interest on Drawings @ 10% p.a.
 X to get a monthly salary of 2,000 and Y to get salary of 9,000 per quarter.
 X is entitled to a commission of 2% on Sales. Sales for the year were 3,50,000.
 Profits & Losses to be shared in the ratio of their Capital Contribution up to
70,000 and above 70,000 equally.
The profit for the year ended 31St March, 2012, before Interest on Partner’s Loan was
1,79,900. The drawings of X and Y were 40,000 and 50,000 respectively.Required:
Pass the necessaryjournal entries relating to appropriations out of profits. Prepare
Profit and Loss Appropriation Account and Partners’ Capital Accounts.
Q36 X, Y and Z started business with capital of 1,20,000, 1,00,000 and 80,000
respectively on 1st April, 2017. Their partnership deed provides for the following:
(a) 7.5% of Net Profit to be transferred to General Reserve.
(b) Partners are to be only allowed interest on capital @ 5% p.a. and are to be charged
interest on drawings @ 6% p.a.
(c) Z is entitled to a salary of 7,000.
(d) X is entitled to a remuneration of 10% of the net profit.
(e) Y is also entitled to a commission of 8% of the net profit after chargingall expenses
including his own commission.
During the year, X withdrew 1,000 at the beginning of every month, Y 1,000 p.m.
duringthe month and Z 1,000 at the end of every month. On 1st Oct. 2017, Z granted
a loan of 6,00,000.
The Manager is entitled to a salary of 1,000 p.m. and a commission of 10% of net
profits after charging all expenses including his commission.
The net profit of the firm for the year ended on 31st March, 2018 before providing for
any of the above adjustments was 1,62,000. Pass necessary journal entries and also
prepare Profit and Loss Appropriation Account for the year ended on 31st March,
2018.

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Adjustments in the Closed Accounts - Past Adjustments
Q37 A, B and C are partners sharing profits and losses in the ratio of 5 : 3 : 1. After
the final accounts have been prepared, it was discovered that interest on drawings
had not been taken into consideration. The interest on drawing of partners
Amounted to A Rs. 1,600, B Rs. 1,200 and C Rs. 800. Give the necessary adjusting
journal entry.
Q38 After the accounts of the partnership have been drawn up and the books closed
off, it is discovered that interest on capitals @ 8% p.a. as provided in the partnership
agreement has been omitted to be recorded. Their capital accounts at the beginning
of the year stood as follows : A Rs. 1,60,000; B Rs. 80,000; C Rs. 60,000. Their profit
- sharing ratio was 2 : l : 1. Instead of altering the Balance Sheet it is decided to
pass necessary adjusting entry at the beginning of the next year. You are required to
give the necessary journal entry.
Q39 A, B and C are partners sharing profits and losses in the ratio of 1 : 2 : 3. They
have omitted interest on capital @ 8% p.a. for two years ended 31st March, 2008.
Their fixed capitals were Rs. 8,00,000, Rs. 12,00,000 and Rs. 16,00,000
respectively. Pass the necessary adjusting entry.
Q40 A and B were partners sharing profits in 2 : 1 ratio. During the year ended 31st
March, 2009, A’s drawings were Rs. 10,000 per month drawn in the beginning of
every month and B’s drawings were Rs. 5,000 per month drawn at the end of every
month. After the preparation of final accounts, it was discovered that interest on A’s
drawings @ 12% p.a. was not taken into consideration. Give the necessary entry on
1st April, 2009.
Q41 P, Q and R are partners sharing profits in the ratio of 2 : l : 1. Their capitals as
on 1st April, 2010 were Rs. 1,00,000, Rs. 60,000 and Rs. 40,000 respectively. At the
end of the year ending 31 st March, 2011 it was found out that interest on capitals
@ 12% p.a., salaries to P Rs. 1,000 per month and R Rs. 2,000 per month were not
adjusted while distributing profits. Show adjusting entry to be made in the next year
for above adjustments.
Q42 Malti, Paro and Arti are partners in a firm having fixed capital of Rs 80,000, Rs
40,000 and Rs 50,000 respectively sharing profit as 7:6:4. The rate of interest on
capital was agreed at 10% p.a. but was wrongly credited to them as 12% p.a. Give the
necessary entry to adjust the balance of Partners’ Capital Accounts.
Q43 R and S were partners in a firm sharing profit in 3:2 ratios. Their respective
fixed capitals were Rs 1,00,000 and Rs 1,50,000. The partnership deed provided
Interest in Capital @ 10% p.a.andInterest on drawing @ 12% p.a.
During the year ended 31-3-2007, R’s drawings were Rs 1,000 per month drawn at
the end of every month and S’s drawing were Rs 2,000 per month drawn at the
beginning of every month. After the preparation of final accounts for the year ended
31-3-2007, it was discovered that interest on R’s drawing was not taken into
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consideration. Calculate interest on R’s drawing and give necessary adjustment entry
for the same
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EDUCOMMERCE ACADEMY; 59, FIRST FLOOR, POCKET 13 SECTOR 24, ROHINI

Q44 A, B and C were partners in a firm. On 1st April, 2012, their capitals stood as
Rs5,00,000; Rs2,50,000 and Rs2,50,000 respectively. As per provision of the
partnership deed:
 C was entitled for a salary of Rs 5,000 p.m.
 A was entitled for a commission of Rs 80,000 p.a.
 Partners were entitled to interest on capital @ 6% p.a.
 Partners will share profit in the ratio of capitals.
Net profit for the year ended 31st March, 2013 was Rs3, 00,000 which was distributed
equally without taking into consideration the above provision. Showing your working
clearly, pass necessary adjustment entry for the above.Pass Adjustment entry
Q45 A and B are partners in a firm sharing profits and losses in the ratio of 3:2. The
following was the Balance Sheet of the firm as on 31-3-2010.
Liabilities (Rs) Assets (Rs.)
Capitals: A 60, 000 Sundry Assets 80, 000
B 20, 000
80, 000 80, 000
The profit Rs 30, 000 for the year ended 31-3-2010 were divided between the partners
without allowing interest on capital@12%p.a.andsalary to A @ Rs1,000 per month.
During the year, Awithdrew Rs 10,000 and B Rs 20,000.Pass the necessary
adjustment journal entry and show your working clearly. (C.B.S.E., 2011)
Q46 A, B and C were partners in a firm. On 1st April 2008, their fixed capital stood at
Rs50,000; Rs 25,000 and Rs 25,000 respectively.As per provisions of partnership deed:
(a) B was entitled for a salary of Rs 5,000p.a.
(b) All the partners were entitled to interest on capital at 5%p.a.
(c) Profits were to be shared in the ratio of their capitals.
The net profit for the year ending 31-3-2009 of Rs 33,000 and 31-3-2010 of Rs 45,000
was divided equally without providing for the above terms.
Pass an adjustment journal entry to rectify the above errors. (C.B.S.E., 2011-AI-C
Q47 A, B and C were partners in a firm. They had no partnership deed. They had been
in business for 4 years and their Profit&Loss for this period was: year ending March
2004 Rs 39,000; March 2005 Rs 54,000; March 2006 Rs 18,000 (loss) and March 2007
Rs 75,000. During 2007-08, they agreed to share profits and losses in the ratio 2:2:1
with retrospective effect from the year 2003-04. It was also decided that interest be
provided on capital @5% p.a. Their fixed capitals were Rs 80,000; Rs 60,000 and Rs
60,000 respectively. Pass single entry to adjust the capital accounts of the partners.
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EDUCOMMERCE ACADEMY; 59, FIRST FLOOR, POCKET 13 SECTOR 24, ROHINI

Q48 X and Y were partners sharing profits and losses in the ratio of 5 : 3. Their
respective fixed capital balances on 31.3.2015 were Rs.1,60,000 and Rs.80,000
respectively. After closing the accounts for the year 2014-15, it was discovered that
salaries and interest on capitals were omitted before distributing the profit. Fill in the
missing information/ figures in the following:
Books of X and Y
JOURNAL
Date Particulars L.F. Debit (Rs.) Credit (Rs.)
1.4.2015 ... ....
To... ....
(Being adjustment entry made due to Omission
of salaries and interest on capital to partners)

STATEMENT SHOWING ADJUSTMENTS

Particulars X Y Firm
Dr. Cr. Dr. Cr. Dr. Cr.
Profits to be taken backin .. : .. (ratio) 50,000 …. ….

Profits/Appropriation to be given
Interest on Capital 9,600 …. ….
Salary …. 20,000 38,000
Profit (balancing figure) in 5:3 …. …. ….
Total …. …. …. …. …. ….

Q49 H, N and C are partners. Their fixed capital contribution in the firm were
Rs.50,000, Rs.40,000 and Rs.30,000 respectively. Fill in the missing
information/figure in the following: Books of H, N and C
JOURNAL
Date Particulars L.F. Debit(Rs.) Credit(Rs.)

(Being Interest on capitals excessively charged

at the rate of 12% instead of 9%, now rectified)

Particulars H N C Firm
Dr Cr Dr Cr Dr Cr Dr Cr
Interest to be taken back 6,000 …. …. ….
Interest to be given …. …. 2,700 ….
Profits to be credited …. …. …. ….
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Total …. …. …. …. …. …. …. ….
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EDUCOMMERCE ACADEMY; 59, FIRST FLOOR, POCKET 13 SECTOR 24, ROHINI

Q50 A, B and C were partners and have fixed capitals. After closing the accounts for
the year 2014-15 it was discovered that the interest on capital was omitted before
distributing the profits. Fill in the missing information/ figure in the following:
Books of A, B and C
JOURNAL
Date Particulars L.F. Debit (Rs.) Credit (Rs.)
1.4.2015 .... Dr. ....
To ..... ....
(Being adjustment entry made due to
omission of interest on capitals)
STATEMENT SHOWING ADJUSTMENT
Particulars A B C Firm
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)
Profit to be reversed ... ... ... 9,000

Interest on Capital 3,000 2,000 1,000 ...

Profit to be credited ... ... ... ...
Total ... ... ... ... ... ... ... …

Q51 A, T and M were partners. They were sharing profits in the ratio of 3:2:1. After
closing the accounts for the year 2014-15 it was discovered that the interest on
capital was omitted before distributing the profits. Fill in the missing
information/figure in the following:
JOURNAL
Date Particulars L.F. Debit (Rs.) Credit (Rs.)

1.4.2015 .... Dr. ....

To ..... ....
(Being adjustment entry made due to
omission of interest on capitals)

Particulars A T M Firm
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)
Profit to be reversed ... ... ... ….

Interest on Capital 2,500 2,500 1,000 ...

Profit to be credited ... ... ... ...
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Total ... ... ... ... ... ... 18,000 …

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EDUCOMMERCE ACADEMY; 59, FIRST FLOOR, POCKET 13 SECTOR 24, ROHINI

Q52 The capitals of Ram and Shyam stood at Rs.6,000 and Rs.4,000 respectively,
after the necessary adjustment in respect of drawings and net profits for the year
ending 31st December 2014. It was subsequently ascertained that 12% per annum
interest each on capital and drawings were omitted to be recorded. Salary allowable to
Ram Rs.1,200 per annum was also not taken into account in arriving at the net profit.
Net Profit was also divided in the ratio of 1:1 instead of 3:1. Ram withdraw regularly
Rs.100 per month in the beginning and Shyam withdraw regularly Rs.100 per month
at the end of every month as drawings. The profits for the year as already divided
amounted to Rs.3,000. You are required to pass the adjusting entry.
Q53Renu, Menu and Tinu were partners in a firm sharing profits in the ratio of 2:2:1.
In the beginning of 2015, the following errors and omissions were detected:
(i) Commission due to Menu Rs.9,000 was not recorded.
(ii) Interest on Capital was allowed @ 10% per annum instead of 12% per annum.
(iii)Interest on drawings @ 9% per annum was not recorded. During the year drawings
of partners were Rs.6,000, Rs.5,000 and Rs.4,000 respectively.
(iv) Salary of Rs.18,000 per annum to Renu and Rs.14,400 per annum to Tinu was
omitted.
Capitals of the partners as on 1.1.2014 were Rs.1,60,000, Rs.1,20,000 and Rs.20,000
respectively. Profits of Rs.90,000 has wrongly been credited in the accounts of
partners in the ratio of 3:2:1. Instead of reopening the closed accounts, partners
decided to pass a single adjusting entry to rectify above omissions. Journalise.
Q54 On 1st April, 2010 the Capitals of A and B were Rs. 80,000 and Rs. 40,000
respectively. They divided profits in their capital ratio. Profits for the year ended
March, 2011 were Rs. 60,000 which have been duly distributed among the partners,
but the following transactions were not passed through the books :—
(a) Interest on Capitals @ 12% pa.
(b) Interest on Drawings A Rs. 2,400; B Rs. 2,000.
(c) Commission due to B Rs. 4,000 on a special transaction.
(d) A is to be paid a salary of Rs. 10,000.
You are required to pass a journal entry on 10th April, 2011 which will not affect the
P & L A/c of the firm and at the same time will rectify the errors.
Q55 The partners of a firm distributed the profits for the year ended 31st March,
2003, Rs. 1,50,000 in the ratio of 2 : 2 : 1 without providing for the following
adjustments:
(i) A and B were entitled to a salary of Rs. 1,500 per quarter.
(ii) C was entitled to a commission of Rs. 18,000.
(iii) A and C had guaranteed a minimum profit of Rs. 50,000 p.a. to B.
(iv) Profits were to be shared in the ratio of 3 : 3 : 2.
Pass necessary journal entry for the above adjustments. (C.B.S.E. 2004 OD)
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EDUCOMMERCE ACADEMY; 59, FIRST FLOOR, POCKET 13 SECTOR 24, ROHINI

Q56 After the accounts of a partnership have been drawn up and the books closed
off, it is discovered that for the years ended 31st March, 2010 and 2011, interest has
been credited to the partners upon their capitals at 5% per annum although, no
provision for interest is made in the partnership agreement.
The amounts involved are :
Interest Credited
Year A B C
Rs. Rs. Rs.
2010 8,400 4,800 2,640
2011 8,640 5,040 2,640
You are required to put through adjusting entry as on 1st April, 2011, if the
profitswere shared as follows in 2010, 2 : 2 : l and in 2011, 3 : 4 : 3.
Q57C, D and E entered into partnership. C agreed to manage the business as D and
E were busy. The profits for the past three years were Rs. 2,00,000, Rs. 4,50,000
and Rs. 5,50,000 respectively which were distributed by C as per partnership act.
Subsequently, D realised that C should be given higher share of profits since she
was managing the business efficiently. He proposed to E that C should be given 40%
share of profits and the remaining profit should be shared by them (ie. D and E)
equally.E agreed to this proposal and it was decided to distribute the profits in this
manner retrospectively for the last three years.
(a) You are required to give necessary adjusting entry.
(b) Identify the values involved in distributing the profits retrospectively.
Q58 M, V and A are partners, their capitals being Rs. 60,000, Rs. 50,000 and Rs.
40,000 respectively. In arriving at these figures, the profits for the year ended, 31st
March, 2011 Rs. 48,000 has already been credited to the partners in the proportion
in which they share profits. Their drawings were Rs. 10,000 (M); Rs. 8,000 (V) and
Rs. 6,000 (A) for the year ending 31st March, 2011. Subsequently the following
omissions were noticed and it was decided to bring them into Account.
(i) Interest on Capital at 10% p.a.
(ii) Interest on Drawings M Rs. 500, V Rs. 400 and A Rs. 300.
Make the necessary journal entry and prepare Capital Accounts of Partner’s.

Q59 X and Y are partners in a firm. Their respective capital contributions are Rs.
20,00,000 and Rs. 10,00,000 and their profit—sharing ratio is 3 : 2. Immediately
after the allocation of Rs. 4,00,000 as profit the following two items have been
ignored : Outstanding expenses of Rs. 30,000 and prepaid expenses of Rs.6,000.
Pass an adjusting journal entry.
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EDUCOMMERCE ACADEMY; 59, FIRST FLOOR, POCKET 13 SECTOR 24, ROHINI

Q60 A and B are partners in a firm sharing profits and losses in the ratio of 2 : 1.
The following was the Balance Sheet of the firm as at 31.3.2010.
Liabilities Rs. Assets Rs.
Capitals: Sundry assets 19,00,000
A 12,00,000 A’s Drawing 50,000
B 8,00,000 B’s Drawing 50,000
20,00,000 20,00,000
The profits Rs. 9,00,000 for the year ended 31.3.2010 were divided between the
partners without allowing interest on capital @9% p.a. and without charging interest
on drawings @12% pa. During the year A withdrew Rs. 2,00,000 and B Rs. 1,00,000.
Pass the adjustment journal entry and show your working clearly.
Q61 R and M are partners sharing profits and losses in the ratio of 2 : 1. At the end
of third year, i.e., on 31st March, 2011, they decided to take their manager Mr. S
into partnership with effect from 1st April, 2008. As manager, S was getting annual
salary of Rs. 48,000. He had also advanced Rs. 60,000 to the firm by way of a loan
on which he was getting interest @ 15% per annum.
During the three years firm’s profits after adjusting salary to S, interest on loan and
interest on the capital of the partners were:
2009 Profit Rs.87,800
2010 Loss Rs. 40,000
2011 Profit Rs. 2,00,000
According to the new agreement, S is to be given annual salary of Rs. 33,600 and
1/5th share in the profits of the firm. S’s loan shall be treated as his Capital fiorn
the beginning and similar to other partners as his capital will carry interest @ 10%
per annum.
Record the journal entry to give effect to the above. (Note : Interest on capital is to be
allowed as a charge on profits).

Guarantee of Minimum Share of Profit

Q62 A, B and C were in Partnership sharing profits fourseventh, two- Seventh and
one—seventh respectively. It being provided that in no year C’s share be less than
Rs. 36,000.The Profit for the year ending 31st March, 2011 amounted to Rs.
2,10,000. You are required to show the appropriation of profit between the partners.
Q63 A, B and C are partners with capitals of Rs. 1,60,000, Rs. 1,20,000 and Rs.
1,00,000 resp. after providing interest on capital at 8% p.a. they divide profits in the
ratio of 1/2 :1/3 : 1/6.A and B have guaranteed that C’s share shall not be less than
Rs. 20,000. During theyear A and B have each withdrawn Rs. 40,000 and C Rs.
20,000. The net profit for the year, before providing interest on partner’s capitals
was Rs. 102,400. You are required to show the Current Accounts of the partners.
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EDUCOMMERCE ACADEMY; 59, FIRST FLOOR, POCKET 13 SECTOR 24, ROHINI

Q64 A, B and C are partners in a firm. Their profit sharing ratio is 3 : 2 : 1. However,
C is guaranteed a minimum amount of Rs. 20,000 as share of profits every year. Any
deficiency arising on that account shall be met by A. The profits for the two years
ending 31st March, 2010 and 2011 were Rs. 60,000 and Rs. 1,80,000 respectively.
Prepare Profit and Loss Appropriation Account for the two years.
Q65 X, Y and Z are partners with capitals of Rs. 80,000; Rs. 60,000 and Rs. 40,000
respectively. They charge 8% p.a. interest on their capitals and divide the profits in
the ratio of 3 : 2 : 1. X has guaranteed that Z’ s share shall not amount to less than
Rs. 10,000 in any one year. Their Drawings during the year were Rs. 10,000; Rs.
8,000 and Rs. 7,000 respectively. Net profits for the year before providing interest on
capitals was Rs. 50,400. Prepare P & L Appropriation A/c and capital accounts.
Q66 S, T, W and X are partners sharing profits in the ratio of 4 : 3 : 2 : 1. X is given
a guarantee that his share of profits in any given year would be not less than Rs.
16,000. deficiency if any, would be borne by other partners equally. The profits for
the year ended 31st March, 2014 amounted to Rs. 130,000. Pass necessary entries
in the books of the firm.
Q67 X and Y are partners in a firm sharing profits in the ratio of 3 : 1. On 1-4-2004
they decide to admit Z for 1/6th share in profits with a minimum guaranteed
amount of Rs. 2,00,000 per annum. Any deficiency arising on that account shall be
met by X. The profits for the year ended March 31, 2005 amounted to Rs. 9,60,000.
Prepare P&LAppr. A/c.
Q68 X and Y were sharing profits in the ratio of 2 : 1. On 1st April, 2014 they
admitted Z for 1/4th share in the profits. Z is guaranteed a minimum profit of Rs.
2,00,000 for the year. Any deficiency in Z‘s share is to be borne by X and Y in the
ratio of 3 : 2. Losses for the year ending 31st March, 2015 amounted to Rs.
2,40,000. Record necessary entries.
Q69 Ali, Bimal and Deepak are partners in a firm. On 1st April, 2011 their capital
accounts stood at Rs. 4,00,000, Rs. 3,00,000 and Rs. 2,00,000 respectively. They
shared profits and losses in the proportion of 5 : 3 : 2. Partners are entitled to
interest on capital @l0% per annum and salary to Bimal and Deepak @ Rs. 2,000
per month and Rs. 3,000 per quarter respectively as per the provisions of the
partnership deed.
Bimal’s share of profit (excluding interest on capital but including salary) is
guaranteed at a minimum of Rs. 50,000 p.a. Any deficiency arising on that account
shall be met by Deepak. The profits of the firm for the year ended 31st -March, 2012
amounted to Rs. 2,00,000. Prepare Profit & Loss Appropriation Account for the year
ended on 31st March, 2012. (C.B.S.E. 2013)

Q70 Seeta, Radha and Sohan were partners. They admit Rakesh as a partner and
guaranteed that his share of profit shall not be less than Rs. 1,40,000. Profits are to
be shared in the ratio of 4 : 3 : 2 : 1 but excess claimed by Rakesh over his normal
17

share has been guaranteed by Seeta and Radha in the ratio of 2 : 1. If total profits
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were Rs. 8,00,000, prepare a statement showing distribution.

EDUCOMMERCE ACADEMY; 59, FIRST FLOOR, POCKET 13 SECTOR 24, ROHINI

 Q71 A, B and C are partners sharing profits in the ratio of 4 : 3 : 2. It was provided
that B's share of profit will not be less than Rs. 3,00,000 per annum. The losses for
the year ended 31st March, 2015 were Rs. 1,70,000, before allowing interest on
Loan of Rs. 2,00,000 taken from A on 1st June, 2014.You are required to show
necessary account for division of loss and pass necessary journal entries.
Q72 A, B and C entered into a partnership on 1st April, 2011 with capitals of Rs.
1,60,000, Rs. 1,00,000 and Rs. 80,000 respectively. Each partner is entitled to
interest on his capital @ 8% p.a. B is entitled to a salary of Rs. 16,000 p.a. and C a
salary of Rs. 12,000 p.a. They decided to share profit and loss in the ratio of 5:3:2.
A guaranteed that the firm would earn a profit of Rs. 1,20,000 before allowing
interest on capital and partners salaries. The actual profit for the year ending 31st
March, 2012 before interest and salaries amounted to Rs. 1,12,000. Prepare Profit &
Loss Appropriation A/c and the Partner’s Capital Accounts.
Q73 A and B were in partnership sharing profits and losses in the proportion of 4/5
and 1/5 respectively. In appreciation of the services of their employee C who was in
receipt of salary of Rs. 2,400 p.a. and a commission of 5% on the net profits after
charging such salary and commission, they took him into partnership as from 1-4-
2011 giving him 1/8th share of the profit. The agreement provided that any excess
over his former remuneration to which C becomes entitled will be paid out of A’s
share of profits.
The profits for the year ended 31st March, 2012 amounted to Rs. 57,000. Divide this
between the partners.
Q74 P, Q and R are in partnership. P and Q sharing profits in the ratio y of 4 : 3 and
R receiving a salary of Rs. 40,000 p.a. plus a commission of 10% of the profits after
charging his salary and commission, or 1/6th of the profit of the firm whichever is
more. Any excess of the latter over the former received by R is, under the
partnership deed, to be borne by P and Q in the ratio of 3 : 2. The profit for the year
ending 31st March, 2012 came to Rs. 7,70,000 after charging R’s salary.Divide the
profits among partners.
Q75 The partners of a firm distributed the profits for the year ended 31st March,
2003, Rs.60,000 in the ratio of 3:2:1 without providing for the following adjustments :
(i) A & B were entitled to a salary of Rs.1,500 per annum
(ii) B was entitled to a commission of Rs.4,500.
(iii)B & C had guaranteed a minimum profit of Rs.25,000 p.a. to A.
(iv) Profits were to be shared in the ratio of 3 : 3 : 2.
Pass necessary journal entry for the above adjustment in the books of the firm.
[CBSE 2004).
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EDUCOMMERCE ACADEMY; 59, FIRST FLOOR, POCKET 13 SECTOR 24, ROHINI