DK Goel Solutions Vol 1 Chapter 1 Accounting for Partnership Firms - Fundamentals

DK Goel Accountancy Class 12 Solutions Chapter 1 Accounting for Partnership Firms – Fundamentals which is outlined by expert Accountancy teachers from the latest version of DK Goel Accountancy Class 12 textbook solutions. We at BYJU’S provide DK Goel Solutions to assist students to comprehend all the theories in particular. There are numerous concepts in Accountancy, but the concepts of Admission of a partner, Accounting Ratios and Cash Flow Statement (As per AS – 3 Revised) is required.

DK Goel Solutions Class 12 – Chapter 1 – Part A

Question 1

A and B are partners in a farm. A is entitled to a salary of ₹15,000 p.m and a commission of 10% of net profit before charging any commission. B is entitled to a commission of 10% of net profit after charging his commission. Net profit till 31st March 2018 was ₹4,40,000. Show the distribution of profit.

Solution:

Dr. Profit and Loss of Appropriate Account

Till 31st March, 2018

Cr.
Particulars Particulars
To A’s Salary 1,80,000 By Profit & Loss A/c (Net Profit) 4,40,000
To A’s Commission

(₹4,40,000 x 10/100)

44,000
To B’s Commission

(₹4,40,000 x 10/110)

40,000
To Profit transferred to:
A’s Capital A/c 88,000

B’s Capital A/c 88,000

1,76,000
4,40,000 4,40,000

Question 2

X, Y, and Z are partners sharing profits and losses in the ratio 3:2:1. After the final accounts have been prepared, it discovered that interest in drawings@5% p.a had not been taken into consideration. The drawings of the partners were: X ₹1,50,000, Y ₹1,26,000 , Z ₹1,20,000. Prepare a journal entry.

Solution:

Calculation of Interest on Drawings:

Since the date of the drawing is not given, interest will be charged for 6 months.

X: 5% on ₹1,50,000 for 6 months = ₹ 3,750

Y: 5% on ₹1,26,000 for 6 months = ₹ 3,150

Z: 5% on ₹1,20,000 for 6 months = ₹ 3,700

₹ 9,900

Table Showing Adjustments
X (₹) Y (₹) Z (₹) Total
Interest on Drawings

Division of ₹5,400 in 3:2:1

Dr.

Dr.

2,550

2,700

1,850

1,850

1,000

900

5,400

5,400

Difference Cr.150 Dr. 50 DR.100 ——–

Hence, the adjusting entry will be:

Journal Entry
Date Particulars L.F Dr. ₹ Cr. ₹
Y’s Capital A/c

Z’s Capital A/c

Dr.

Dr.

50

100

To X’s Capital A.c

(Adjustment in respect of interest on drawing omitted in previous year’s account)

150

Question 3

Akshara and Samiksha are partners. Business is carried from the property owned by Akshara on a monthly rent of ₹5,000. Akshara is entitled to a salary of ₹40,000 per quarter and Samiksha get a commission of 4% on net sales, which during the year was ₹5,00,000. Net profit till 31st March, 2018 before providing for rent was ₹6,00,000

Prepare a profit and loss appropriate account till 31st March 2018.

Solution:

Dr. Profit and Loss Appropriate Account

Till 31st March, 2018

Cr.
Particulars Particulars
To Salary to Akshara

To commission to Samiksha

1,60,000

2,00,000

By Profit & Loss A/c (Net Profit)

( ₹6,00,00 – ₹60,000)

5,40,000
To Profit transferred to:
Akshara’s Capital A/c 90,000

Samiksha’s Capital A/c 90,000

1,80,000
5,40,000 5,40,000

*Rent paid to a partner is a charge against profits. It will be debited to the Profit & Loss Account.

Question 4

Ravi and Mohan were partners in a firm sharing profits in the ratio of 7:5. Their respective fixed capitals were Ravi ₹10,00,000 and Mohan ₹7,00,000. The partnership deed provided for the following:

  1. Interest on Capital @ 12% pa.
  2. Ravi’s salary ₹6,000 per month and Mohan’s salary ₹60,000 per year.

The profit till March 31-3-2019 was ₹5,04,000 which was distributed equally, without providing for the above. Record an adjustment entry.

Solution:

Statement of Adjustments
Ravi (₹) Mohan (₹) Total (₹)
Interest on Capitals Cr. 1,20,000 84,000 2,04,000
Salary Cr. 72,000 60,000 1,32,000
Profit left* after authorizing interest on capital and salary will be ₹5,04,000 – ₹2,04,000 – ₹1,32,000 = ₹1,68,000. The profit sharing ration will be divided into, i.e, 7:5 98,000 70,000 1,68,000
Net amount that should have been received Cr. 2,90,000 2,14,000 5,04,000
Less: Profit already distributed equally Dr. 2,52,000 2,52,000 5,04,000
Net Effect (Cr.) 38,000 (DR.) 38,000 ———–

*Remaining profit will have to be calculated when profit has already been distributed in wrong profit sharing ratio.

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