Accountancy Class 12

Chapter: 1 and 2

Fundamentals of Partnership and Goodwill

Q1 Vinod, Shubh and Gaurav were partners sharing profits in the ratio of 1:1:1. Their fixed capitals were Rs.2,00,000 each. Manager of the firm will be paid 10% commission after charging such commission. Vinod has advanced Rs.1,00,000 to the firm as loan on 1 July, 2012. Partnership deed is silent on interest on loan to the partner. A guaranteed amount of Rs.30,000 will be paid to Gaurav whether there is profit or loss incurred by the firm. Profit on 31st December, 2012 was Rs.25,000. Show the distribution of profit or loss to the partners

Q2 Vinod and Kumar are partners sharing profits and losses in the ratio of 3:2. Their capitals were Rs.1,00,000 and Rs.50,000 respectively. Rate of Interest on capital is 10% p.a. Show the distribution of profit when: Case 1: Partnership deed is silent as to interest on capital and profit for the year is Rs.30,000. Case 2: Partnership deed provides for interest on capital but there is loss Rs.20,000. Case 3: Partnership deed provides for interest on capital and profit for the year is Rs.20,000. Case 4: Partnership deed provides for interest on capital and profit for the year is Rs.9,000. Case 5: Interest on capital is a charge and profit for the year is Rs.9,000. Case 6: Interest on capital is a charge and loss for the year is Rs.5,000

Q3 A, B, C and D are partners sharing profits and losses in the ratio of 4:3:3:2. Their fixed capitals on 31.3.2010 were Rs.30,000; Rs.45,000; 60,000 and 45,000 respectively. After preparing the final accounts for the year ended 31.3.2011. it was discovered that interest on capital @12% p.a. was not allowed and interest on drawings amounting to Rs.1,000; 1,250; 750 and 500 respectively was not charged. Give necessary adjustment entry.

Q4. PK, MK and NK shared profits in the ratio of 3:2:1. The profits of the last three years were Rs.2,80,000, Rs.1,68,000 and Rs.2,12,000 respectively. These profits were by mistake, shared equally for all the three years. It is now decided to correct the error. Give entry

A partnership firm earned net profits during the last three years as follows: Years Profit 

2007-08 38,000

2008-09 44,000

2009-10 50,000

The Capital Employed in the firm throughout the above mentioned period has been Rs.80,000. Having regard to the risk involved, 15% is considered to be a fair return on the capital. The remuneration of all the partners during this period is estimated to be Rs.20,000 per annum. Calculate the value of goodwill on the basis of (i) Two years purchase of super profits earned on average basis during the above mentioned three years and (ii) Capitalization method.

Q.5 A, B and C were partners in a firm having capitals of Rs. 60,000, Rs. 60,000 and Rs. 80,000 respectively. Their current account balances were A- Rs. 10,000, B- Rs. 5000 and C- Rs. 2000 (Dr.). According to the partnership deed the partners were entitled to an interest on capital @ 5% p.a. C being the working partner was also entitled to a salary of Rs. 6,000 p. a. The profits were to be divided as follows:

         (i) The first Rs. 20,000 in proportion to their capitals.

         (ii) Next Rs. 30,000 in the ratio of 5:3:2.

         (iii) Remaining profits to be shared equally.

        During the year the firm made a profit of Rs. 1,56,000 before charging any of the above items.  

        Prepare the profit and loss appropriate on A/C.

Q.6 A and B are partners sharing profits in proportion of 3:2 with capitals of Rs. 40,000 and Rs. 30,000 respectively. Interest on capital is agreed at 5 % p.a. B is to be allowed an annual salary of Rs. 3000 which has not been withdrawn. During 2001 the profits for the year prior to calculation of interest on capital but after charging B’s salary amounted to Rs. 12,000. A provision of 5% of this amount is to be made in respect of commission to the manager.

                       

                         Prepare profit and loss appropriation account showing the allocation of profits.