ASSIGNMENT

CHAPTER 1
ACCOUNTING FOR PARTNERSHIP FIRMS FUNDAMENTALS
1. Mohan, Sohan and Rohan are partners in a firm. Their drawings are :
(1) Mohan draws ₹ 4,000 in the beginning of every month.
(2) Sohan draws ₹ 4,000 in the middle of every month.
(3) Rohan draws ₹ 4,000 at the end of every month.
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2. Garry, Harry and Robert were partners in a firm sharing profits in the ratio of 7:4:9 . Their capitals on 1st April
2021 were: Garry ₹ 2,00,000; Harry ₹ 75,000 and Robert ₹ 3,50,000. Their partnership deed provided for the
following:
(i) 10% of the net profit to be transferred to General Reserve.
(ii) Interest on capital is to be allowed @ 9% p.a.
(iii) Salary of ₹ 6,000 per month to Harry
(iv) Interest on Drawings @ 6% p.a.
Drawings made against the anticipated profits, by Garry during the year ₹ 25,000, Harry withdrew ₹ 5,000 at
the end of each quarter, Robert withdrew ₹ 25,000 on1st June 2021 for personal use. During the year ended
31st March 2022 the firm earned profits of ₹ 1,70,000.

Prepare Profit and Loss Appropriation Account.

3. Manoj and Billu are equal partners. Manoj is a sleeping partner and Billu is an Active working partner. Their
capitals on 1st April 2021 were: Manoj ₹ 6,000 Credit and Billu (₹ 20,000) Debit. Mr Manoj has given a loan to
the firm ₹ 10,000 on 1st April 2021 @ 10% p.a.
Partnership deed allows 10% p.a. interest on capital. Salary to every Active working partner @ 3,000 p.a. but
partnership deed is silent on interest on loan payable to any partner, in case any partner provides loan to the
firm. Profit for the year ending 31st March 2022 was ₹ 7,000 before providing above.
Prepare Profit and Loss Appropriation Account.

4. X and Y started a partnership firm on 1st Dec.2021. Their capitals were ₹ 6,00,000 and ₹ 4,50,000 respectively.
On 1st Jan.2022 X advanced a loan of ₹ 1,00,000 to the firm. It was agreed that:
i. Interest on Partner’s Loan will be paid @ 10% p.a.
ii. Rent will be paid to Y ₹ 2,000 per month (for providing office space to the firm)
iii. Interest on drawings to be charged @ 10% p.a. Interest on capital allowed @ 8% p.a. as charge.
iv. Manager will get a commission of 10% on the net profit after charging such commission.

Drawings made by X and Y during the year ₹ 3,000 and ₹ 4,000 respectively. A fine of ₹ 650 was charged from Y
for competing with the firm. Profit during the year was ₹ 16,000.

Show the distribution of profit/loss when interest on capital is to be allowed whether firm incurs a loss.

5. A, B and C were partners in a firm. On 1st April, 2020 the balance in their capital accounts stood at ₹ 8,00,000, ₹
6,00,000 and ₹ 4,00,000 respectively. As per the provisions of the partnership deed, partners were entitled to
interest on capital @ 5% p.a., salary to B ₹ 3,000 per month and a commission of ₹ 12,000 to C. A’s share of
profit, excluding interest on capital, was guaranteed at ₹ 25,000 p.a. B’s share of profit, including interest on
capital but excluding salary was guaranteed at ₹ 55,000 p.a. Any deficiency arising on that account was to be
met by C. The profits of the firm for the year ending 31st March, 2021 amounted to ₹ 2,16,000.
Prepare Profit and Loss Appropriation Account for the year ending 31st March, 2021.

6. On 31st March, 2021, the balance in the capital accounts of Asha, Nisha and Disha after making adjustments for
profits and drawings were ₹ 1,50,000, ₹ 1,20,000 and ₹ 90,000 respectively. Subsequently, it was discovered
that interest on capital and interest on drawings had been omitted. The partners were entitled to interest on
capital @ 10% p.a. Interest on drawings was also to be charged @ 10% p.a. The drawings during the year were:
 Asha ₹ 50,000, Nisha ₹ 60,000 and Disha ₹ 30,000. The net profit for the year ending 31st March, 2021
amounted to ₹ 1,00,000. The profit-sharing ratio was 2: 2: 1. Pass the necessary adjustment entry. Also show
your workings clearly.

7. Yadu, Vidu and Radhu were partners in a firm sharing profits in the ratio of 4 : 3 : 3. Their fixed capitals on 1st
April, 2020 were ₹ 9,00,000, ₹ 5,00,000 and ₹ 4,00,000 respectively. On 1st November, 2020, Yadu gave a loan
of ₹ 80,000 to the firm. As per the partnership agreement:
(i) The partners were entitled to an interest on capital @ 6% p.a.
(ii) Interest on partners’ drawings was to be charged @ 8% p.a. The firm earned profits of ₹ 2,53,000
(after interest on Yadu’s loan) during the year 2020 − 21. Partners’ drawings for the year amounted to
Yadu : ₹ 80,000, Vidu : ₹ 70,000 and Radhu :₹ 50,000.

Prepare Profit and Loss Appropriation Account for the year ending 31st March, 2021.

8. Ram, Mohan and Sohan were partners sharing profits in the ratio of 2 : 1 : 1. Ram withdrew ₹ 3,000 every
month and Mohan withdrew ₹ 4,000 every month. Interest on drawings @ 6% p.a. was charged, whereas the
partnership deed was silent about interest on drawings. Showing your working clearly, pass the necessary
adjustment entry to rectify the error.

9. Rajiv and Sanjeev were partners in a firm. Their partnership deed provided that the profits shall be divided as
follows: First ₹ 20,000 to Rajeev and the balance in the ratio of 4 : 1. The profits for the year ended 31st March,
2022 were ₹ 60,000 which had been distributed among the partners On 1-4-2021 their capitals were Rajeev ₹
90,000 and Sanjeev ₹ 80,000. Interest on capital was to be provided @ 6% p.a. While preparing the profit and
loss appropriation interest on capital was omitted. Pass necessary rectifying entry for the same. Show your
workings clearly.

10. Sonu and Rajat started a partnership firm on April 1, 2021. They contributed ₹ 8,00,000 and ₹ 6,00,000
respectively as their capitals and decided to share profits and losses in the ratio of 3 : 2. The partnership deed
provided that Sonu was to be paid a salary of ₹ 20,000 per month and Rajat a commission of 5% on turnover. It
also provided that interest on capital be allowed @ 8% p.a. Sonu withdrew ₹ 20,000 on 1st December, 2021 and
Rajat withdrew ₹ 5,000 at the end of each month. Interest on drawings was charged @ 6% p.a. The net profit as
per Profit and Loss Account for the year ended 31st March, 2022 was ₹4,89,950. The turnover of the firm for the
year ended 31st March, 2022 amounted to ₹ 20,00,000. Pass necessary journal entries for the above
transactions in the books of Sonu and Rajat.

11. Jay, Vijay and Karan were partners of an architect firm sharing profits in the ratio of 2: 2: 1. Their partnership
deed provided the following:
I. A monthly salary of ₹ 15,000 each to Jay and Vijay.
II. Karan was guaranteed a profit of ₹ 5,00,000 and Jay guaranteed that he will earn an annual fee of ₹
2,00,000. Any deficiency arising because of guarantee to Karan will be borne by Jay and Vijay in the ratio
of 3: 2.

During the year ended 31st March, 2022 Jay earned fee of ₹ 1,75,000 and the profits of the firm amounted to
₹15,00,000.

Showing your workings clearly prepare Profit and Loss Appropriation Account and the Capital Account of Jay,
Vijay and Karan for the year ended 31st March, 2022.

12. Moli, Bhola and Raj were partners in a firm sharing profits and losses in the ratio of 3 : 3 : 4. Their partnership
deed provided for the following :
i. Interest on capital @ 5% p.a.
ii. Interest on drawing @ 12% p.a.
iii. Interest on partner’s loan @ 6% p.a.
 iv. Moli was allowed an annual salary of ₹ 4,000; Bhola was allowed a commission of 10% of net profit as
shown by Profit and Loss Account and Raj was guaranteed a profit of ₹ 1,50,000 after making all the
adjustments as provided in the partnership agreement.

Their fixed capitals were Moil: ₹ 5,00,000; Bhola : ₹ 8,00,000 and Raj : ₹ 4,00,000. On 1st April, 2021 Bhola
extended a loan of ₹ 1,00,000 to the firm. The net profit of the firm for the year ended 31st March, 2022 before
interest on Bhola’s loan was ₹ 3,06,000.

Prepare Profit and Loss Appropriation Account of Moli, Bhola and Raj for the year ended 31st March, 2022 and
their Current Accounts assuming that Bhola withdrew ₹ 5,000 at the end of each month, Moli withdrew ₹
10,000 at the end of each quarter and Raj withdrew ₹ 40,000 at the end of each half year.

13. Mudit and Uday are partners in a firm sharing profits in the ratio 2: 3. Their capital accounts as on April 1, 2021
showed balances of ₹ 70,000 and ₹ 60,000 respectively. The drawings of Mudit and Uday during the year 2021-
2022 were ₹ 16,000 and ₹ 12,000 respectively. Both the amounts were withdrawn on 1st January 2022. It was
subsequently found that the following items had been omitted while preparing the final accounts for the year
ended 31st March 2022.
(a) Interest on capitals @ 6% p.a.;
(b) Interest on drawings @ 6% p.a.;
(c) Mudit was entitled to a commission of ₹ 4,000 for the whole year. Showing you workings clearly pass
a rectifying entry in the books of the firm.

14. Piya and Bina are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following was the Balance
Sheet of the firm as on 31-3-2022.

Liabilities Amount ₹ Assets Amount ₹

Capitals: Sundry Assets 1,20,000

Piya 80,000

Bina 40,000 1,20,000

1,20,000 1,20,000

The profits ₹ 30,000 for the year ended 31-3-2022 were divided between the partners without allowing interest
on capital @ 12% p.a. and salary to Piya @ ₹ 1,000 per month. During the year Piya withdrew ₹ 8,000 and Bina
withdrew ₹ 4,000. Showing your working notes clearly, pass the necessary rectifying entry.

15. Amar, Binod and Chaman are in trading business of Jute and Jute products. They have been sharing profits
equally up to the year ended 31st March, 2020. They reconstituted the firm and profit-sharing ratio was
changed to 3:2:1. Chaman being a working partner demanded that he should be paid annual salary of ₹ 75,000.
The partners did not agree to salary demanded by Chaman but agreed to give him minimum guaranteed profit
of ₹ 60,000. Their capitals as on 1st April, 2020 were ₹ 5,00,000, ₹ 4,00,000 and ₹ 3,00,000 respectively. Profit
for the year ended on 31st March, 2021 was ₹ 3,00,000.
Answer the following questions
a) What will be partners’ profit share if Chaman’s share of profit is guaranteed at ₹ 60,000?
b) What will be partners’ profit share if deficiency in Chaman’s profit share is to be borne by Amar and
Binod in the ratio of 4:1?
c) What will be partners’ profit shares, if Chaman’s share of profit is guaranteed by Amar personally?
d) What will be partners’ profit shares, if Chaman’s share of is guaranteed after allowing interest on
capital @ 6% p.a.

16. A manager gets 5% commission on net profit after charging such commission. Gross profit ₹ 5,80,000 and
expenses of indirect nature other than manager’s commission are ₹ 1,60,000. Commission amount will be___
17. Ram and Shyam are partners sharing profits and losses equally. Financial Statements are prepared for the year
ended 31st March, 2021, which show a profit of ₹ 1,50,000 before allowing interest on a loan of ₹ 50,000 from
Shyam @ 10% p.a. Each partner is entitled to salary as follows:
Ram ₹ 15,000 per annum
Shyam ₹ 10,000 per annum

What is Ram’s total appropriation of profit for the year ended 31st March, 2021?