1.
A, B and C are partners in a
firm. A, who has advanced a loan of Rs 10,000 to the firm, demands interest on
his loan at 10% p.a. at the end of the accounting period. State whether the
claim of A is valid or not in absence of partnership deed. Also support your
answer with sufficient reason.
2.
Abhay, Bhola and Charu are three
partners in a shoe-producing firm. Charu without intimating the other two
partners secretly started her own shoe-production unit. She used the firm's
contacts and reputation to maximise profits in her personal business. Identify any two
values violated by Charu in this case.
3.
Is rent paid to partner debited to
Profit and Loss Account or Profit and Loss Appropriation Account?
4.
Sabrina and Ankita started business
on April 01, 2011 with their capital balances of Rs 3,00,000 and Rs 2,50,000
respectively. Sabrina withdrew Rs 50,000 on October 01, 2011 and Ankita
introduced Rs 50,000 on the same day. Calculate interest on their capital at
12% per annum for the year ended March 31, 2012.
5.
Harman and Preet are partners in a
firm with their capital balances of Rs 10,00,000 and Rs 20,00,000 respectively
on April 01, 2010. Harman withdrew Rs 10,000 in the beginning of each month and
Preet withdrew Rs 20,000 at the end of each month. Calculate the interest on
drawings at 10% per annum for the year.
6.
Roopesh and Ravi are partners
sharing profits and losses equally. Their capital accounts balances were Rs
3,00,000 and Rs 2,00,000 respectively on January 01, 2010. During the
year, the firm earned profit of Rs 40,000. According to their partnership deed,
interest on capital is provided at 10% per annum. Prepare the Profit and Loss
Appropriation Account.
7.
Arpit and Manas are partners in a
firm sharing profits and losses equally. They admitted Ragini as a 1/3 rd partner with share of profit with
a minimum guarantee of Rs 1,00,000. They agreed to bear any deficiency arises
on account of guarantee to Ragini in the ratio of 3:1. The net profit for the
year amounted to Rs 3,70,000. Out of this profit, the firm utilised Rs 1,00,000
to organise an education campaign for the poor students of that region. The
remaining profit of Rs 2,70,000 was appropriated among the partners. Prepare
Profit and Loss Appropriation Account to show the appropriation of profits. Also, identify the
values involved in the decision of the partners.
8.
Abhay and Litesh started a
partnership business on April 01, 2011 contributing Rs 5,00,000 and Rs 2,00,000
as capital. According to their partnership deed, Litesh is entitled to salary
of Rs 10,000 per month and all the partners are entitled to interest on their
capitals at 10% per annum and remaining profit is distributed in their capital
ratio. During the year, the firm earned Net Profit of Rs 4,00,000. On March 31,
2012, their Profit and Loss Appropriation Account (given below) showed the
distribution of the Net Profit without appropriation of items in the agreement.
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Profit
and Loss Appropriation Account
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Dr.
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Cr.
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Particulars
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Amount
Rs
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Particulars
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Amount
Rs
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Profit transferred to
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Net Profit
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4,00,000
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Abhay’s
Capital
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2,00,000
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(Transferred from Profit and Loss
A/c)
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Litesh’s
Capital
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2,00,000
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4,00,000
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4,00,000
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4,00,000
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Show
the correct distribution of Net Profit by preparing Profit and Loss
Appropriation Account.
9.
Anand, Rahul and Vijay are partners
in a firm sharing profits and losses in the ratio 3:2:1. Their fixed capital
accounts are Rs 3,00,000, Rs 2,00,000 and Rs 1,00,000 respectively. Anand is
entitled to salary of Rs 5,000 per month and Rahul is entitled to commission of
Rs 20,000. Interest on capital is provided at 10% per annum. Drawings made
during the year by Anand, Rahul and Vijay are Rs 50,000, Rs 30,000 and Rs
20,000 respectively. Interest on drawings is to be charged at 10% irrespective
of the period. Net profit for the year is Rs 4,00,000. Prepare the Profit and
Loss Appropriation Account and Partners’ Current Account.
10.
Enlist any two advantages and values revealed by a partnership deed.
11. Show the Journal entries related
to payment of interest on a partner’s loan and for charging interest on the
loan at the end of an accounting period.
12. Which of the following
statements cannot be
regarded as a right of partner?
o
Every partner has the right to share
profits or losses with other partners as per the agreement.
o
Only active partners have a right to
take part in the management of the business.
13. What is the purpose behind
preparation of Profit and Loss Appropriation Account?
14. Calculate interest on drawings
in the below given situations.
o
A drew Rs 2,000 during the year,
interest is to be charged @ 6 %.
o
A drew Rs 2,000 during the year,
interest is to be charged @ 6% p.a.
o
A drew Rs 2,000 on April 01, 2014,
Interest is to be charged @ 6%. Accounts are closed on December 31, every year.
o
A drew Rs 2,000 on April 01, 2014,
Interest is to be charged @ 6% p.a. Accounts are closed on December 31, every
year.
o
A drew Rs 2,000 on April 01, 2014
and Rs 1,000 on Oct 01, 2014, interest is to be charged @ 6% p.a. Accounts are
closed on December 31, every year.
o
A drew Rs 200 in the beginning of
each month throughout the year. Interest is to be charged @ 6% p.a. Accounts
are closed on December 31, every year.
o
A drew Rs 3,000 throughout the year.
He drew regularly equal amount at end of every month. Interest is to be charged
@ 6% p.a.
o
A drew Rs 3,000 in the beginning of
each quarter. Interest is to be charged 8% p.a.
o
In above case accounts are closed on
December 31, every year.
15. Show the distribution of profit
or loss by preparing appropriate accounts in the following given cases.
Case a) A and B are partners sharing profit and loss in the
ratio 3:2, their partnership firm incurred a loss of Rs 20,000.
Case b) A and B are partners sharing profit and loss in the
ratio 3:2, their partnership firm earned a profit of Rs 20,000.
16. Calculate Interest on Capital in
each of following cases.:
(1)A and B have capital balances of
Rs 20,000 and Rs 15,000 on January 01, 2014 .From October 01, 2014 they decided
that capital of each partner will be Rs 12,000.
(2)On December 31, 2014, the capital
accounts of A and B showed balances of Rs 30,000 and 20,000 respectively. These
balances were ascertained after adjusting profit and drawings. On January
01, 2014, drawings made by A and B amounted Rs 2,000 and Rs 4,000 respectively.
Profit earned during the year 2010 was Rs 12,000.
(3)On January 01, 2010, A and B have
capital balances Rs 10,000 each. On April 01, 2010, A and B withdrew capital of
Rs 2,000 and Rs 3,000. On October, 01, 2010, Rs 4,000 and Rs 5,000 were
introduced by A and B as fresh capitals. Interest on Capital is to be allowed
at10% p.a. in each of the above cases with the assumption that accounts are
closed on December 31 every year.
17. A and B are partners sharing
profits or losses in the ratio 3:2. In the beginning of the year 2010, capitals
of A and B were Rs 1,20,000 and Rs 1,00,000 respectively. As per the agreement,
interest on capital is to be allowed 5% p.a. and salary to be paid to A and B
of Rs 2,000 per month and Rs 40,000 per annum. At the end of 2010, firm’s
profit without providing interest on capital and partners’ salaries was Rs
50,000.
Show the distribution of profit in
the following cases.
o
When interest capital and salaries
is to be distributed only out of profit.
o
When interest on capital and
salaries is to be charged against profit.
o
When interest on capital is to be
charged against profit and salary is to be distributed only out of profit.
18. A and B are partners sharing profits or losses equally.
Their capital on January 01, 2010 were as Rs 1,00,000 and 80,000, respectively.
On December 31, 2010, profit was distributed without providing interest on
capital 10% p.a. Show the effect of interest on capital by passing an adjusting
Journal entry.
19. A and B are partners sharing profits or losses equally.
Their capital on January 01, 2010 were Rs 1,00,000 and Rs 80,000, respectively.
After the closing of books, it was found that 10% interest on capital was
debited to profit and loss appropriation account; however, there was no such
clause of providing interest on capital as per their partnership deed. Make the
necessary correction by passing an adjusting Journal entry.
20. A and B are partners sharing profits and losses in the
ratio 1:1. On December 31, 2010, their capitals after adjustment of profit and
drawings were Rs 1,50,000 and Rs 1,60,000, respectively. Having closed the
accounts for the year 2010, it was found that 10% interest on capital and 5%
interest on drawings were omitted while distributing profit among the partners.
Profit for the year amounted to Rs 60,000 and drawings of A and B were Rs
10,000 and Rs 15,000, respectively. Make the necessary correction by passing an
adjusting Journal entry.
21. A and B are partners for 2:1 ratio. Their partnership
firm earned profit of Rs 24,000 and Rs 30,000 for the accounting year 2009 and
2010. On January 01, 2011, partners decided to revise their profit sharing
ratio as 1:1 with effect from 2009. Make adjustment of profit through passing
adjusting Journal entry.
Also,
identify the values involved in the question.
