Accountancy

Q. What is meant by the word ‘Company’? Describe its characteristics.

Q. Sajal and Kajal are partners sharing profits and losses in the ratio of 2 : 1. On 1st April, 2017 their Capitals were: Sajal–₹ 50, 000 and Kajal–₹ 40, 000.
Prepare Profit and Loss Appropriation Account and the Partners Capital Accounts at the end of the year after considering the following items:
(a) Interest on Capital is to be allowed @ 5% p.a.
(b) Interest on the loan advanced by Kajal for the whole year, the amount of loan being ₹ 30, 000.
(c) Interest on partners drawings @ 6% p.a. Drawings: Sajal ₹ 10, 000 and Kajal ₹ 8, 000.
(d) 10% of the divisible profit is to be transferred to Reserve.
The net profit for the year ended 31st March, 2018 ₹ 68, 460.
Note: Net profit means net profit after debit of interest on loan by the partner.

Q. Reema and Seema are partners sharing profits equally. The Partnership Deed provides that both Reema and Seema will get monthly salary of Rs 15, 000 each, Interest on Capital will be allowed @ 5% p.a. and Interest on Drawings will be charged @ 10% p.a. Their capitals were Rs 5, 00, 000 each and drawings during the year were Rs 60, 000 each.
The firm incurred a loss of Rs 1, 00, 000 during the year ended 31st March, 2018.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018.

Q. Ali the Bahadur are partners in a firm sharing profits and losses as Ali 70% and Bahadur 30%. Their respective capitals as at 1st April, 2017 stand as Ali ₹ 25, 000 and Bahadur ₹ 20, 000. The partners are allowed interest on capitals @ 5% p.a. Drawings of the partners during the year ended 31st March, 2018 amounted to ₹ 3, 500 and ₹ 2, 500 respectively.
Profit for the year, before charging interest on capital and annual salary of Bahadur @ ₹ 3, 000, amounted to ₹ 40, 000, 10% of divisible profit is to be transferred to Reserve.
You are asked to show Partners Current Account and Capital Accounts recording the above transactions.

Q. Amit, Binita and Charu are three partners. On 1st April, 2017, their Capitals stood as: Amit ₹ 1, 00, 000, Binita ₹ 2, 00, 000 and Charu ₹ 3, 00, 000. It was decided that:
(a) they would receive interest on Capital @ 5% p.a.,
(b) Amit would get a salary of ₹ 10, 000 per month,
(c) Binita would receive commission @ 5% of net profit after deduction of commission, and
(d) 10% of the net profit would be transferred to the General Reserve.
Before the above items were taken into account, the profit for the year ended 31st March, 2018 was ₹ 5, 00, 000. Prepare Profit and Loss Appropriation Account and the Capital Accounts of the partners.

Q.

Mohan, Vijay and Anil are partners, the balance on their capital accounts being Rs 30, 000, Rs 25, 000 and Rs 20, 000 respectively. In arriving at these figures, the profits for the year ended March 31, 2007 amounting to Rs 24, 000 had been credited to partners in the proportion in which they shared profits. During the year their drawings for Mohan, Vijay and Anil were Rs 5, 000, Rs 4, 000 and Rs 3, 000 respectively. Subsequently, the following omissions were noticed

(a) Interest on Capital, at the rate of 10% pa, was not charged.

(b) Interest on Drawings Mohan Rs 250, Vijay Rs 200, Anil Rs 150 was not recorded in the books.

Record necessary corrections through journal entries.

Q. X and Y are partners sharing profits and losses in the ratio of 2 : 3 with capitals ₹ 2, 00, 000 and ₹ 3, 00, 000 respectively. On 1st October, 2017, X and Y granted loans of ₹ 80, 000 and ₹ 40, 000 respectively to the firm. Show distribution of profits/losses for the year ended 31st March, 2018 in each of the following alternative cases:
Case 1 : If the profits before interest for the year amounted to ₹ 21, 000.
Case 2 : If the profits before interest for the year amounted to ₹ 3, 000.
Case 3 : If the profits before interest for the year amounted to ₹ 5, 000.
Case 4 : If the loss before interest for the year amounted to ₹ 1, 400.

Q. Naresh and Sukesh are partners with capitals of ₹ 3, 00, 000 each as on 31st March, 2018. Naresh had withdrawn ₹ 50, 000 against capital on 1st October, 2017 and also ₹ 1, 00, 000 besides the drawings against capital. Sukesh also had drawings of ₹ 1, 00, 000.
Interest on capital is to be allowed @ 10% p.a.
Net profit for the year was ₹ 2, 00, 000, which is yet to be distributed.
Pass the journal entries for interest on capital and distribution of profit.gbn knnk j

Q.

Pranav, Karan and Rahim were partners in a firm sharing profits and losses in the ratio of 2:2:1. On 31st March, 2017, their Balance Sheet was as follows :

BALANCE SHEET OF PRANAV, KARAN AND RAHIM
as on 31st March, 2017
$\begin{array}{cccc}\text{Liabilities}& \text{Amount}& \text{Assets}& \text{Amount}\\ & \text{(Rs)}& & \text{(Rs)}\\ \text{Creditors}& 3,00,000& \text{Fixed Assets}& 4,50,000\\ \text{General Reserve}& 1,50,000& \text{Sotck}& 1,50,000\\ \text{Capitals :}& & \text{Debtors}& 2,00,000\\ \text{Pranav}& 2,00,000& \text{Bank}& 1,50,000\\ \text{Karan}& 2,00,000& & \\ \text{Rahim}& 1,00,000& & \\ \text{Total}& 9,50,000& \text{Total}& 9,50,000\end{array}$

Karan died on 12-6-2017. Accoring to the partnership deed, the legal representatives of the deceased partner were entitled to the following:

(i) Balance in his Capital Account.

(ii) Interest on his Capital @ 12% p.a.

(iii) Share of goodwill. Goodwill of the firm on Karan's death was valued at Rs 60, 000.

(iv) Share in the profits of the firm till the date of his death, calculated on the basis of last year's profit. The profit of the firm for the year ended 31-3-2017 was Rs 5, 00, 000.

Prepare Karan's Capital Account to be presented to his representatives.

Q. Bat and Ball are partners sharing the profits in the ratio of 2 : 3 with capitals of ₹ 1, 20, 000 and ₹ 60, 000 respectively. On 1st October, 2017, Bat and Ball granted lonas of ₹ 2, 40, 000 and ₹ 1, 20, 000 respectively to the firm. Bat had allowed the firm to use his property for business for a monthly rent of ₹ 5, 000. The loss for the year ended 31st March, 2018 before rent and interest amounted to ₹ 9, 000. Show distribution of profit/loss.

Q.

Mannu and Shristhi are partners in a firm sharing profit in the ratio of 3:2. Following is the balance sheet of the firm as on March 31, 2006.

Balance Sheet

as on March 31, 2006

$\begin{array}{cccccc}\text{Liabilities}& & \text{Amt. (Rs)}& \text{Assets}& & \text{Amt. (Rs)}\\ \text{Mannu's Capital}& 30,000& & \text{Drawings}& & \\ \text{Shristhi's Capital}& \underset{–}{10,000}& 40,000& \text{Mannu}& 4,000& \\ & & & \text{Shristhi}& \underset{–}{2,000}& 5,000\\ & & & \text{Other Assets}& & 34,000\\ & & \underset{–}{\overline{\underset{–}{40,000}}}& & & \underset{–}{\overline{\underset{–}{40,000}}}\end{array}$

Profit for the year ended March 31, 2006 was Rs 5, 000 which was divided in the agreed ratio, but interest @5% pa on capital and @ 6% pa on drawings was inadvertently enquired. Adjust interest on drawings on an average basis for 6 months. Give the adjustment entry.

Q. Simran and Reema are partners sharing profits in the ratio of 3 : 2. Their capitals as on 31st March, 2017 were ₹ 2, 00, 000 each whereas Current Accounts had balances of ₹ 50, 000 and ₹ 25, 000 respectively interest is to be allowed @ 5% p.a. on balances in Capital Accounts. The firm earned net profit of ₹ 3, 00, 000 for the year ended 31st March 2018.
Pass the journal entries for interest on capital and distibution of profit. Also prepare Profit and Loss Appropriation Account for the year.

Q. Ram, Mohan and Sohan sharing profits and losses equally have capitals of ₹ 1, 20, 000, ₹ 90, 000 and ₹ 60, 000. For the year ended 31st March, 2018, interest was credited to them @ 6% instead of 5%.
Give adjustment Jounral entry.

Q.

Azad and Benny are equal partners. Their capitals are Rs 40, 000 and Rs 80, 000 respectively. After the accounts for the year have prepared it is discovered that interest at 5% pa as provided in the partnership agreement, has not been credited to the capital accounts before distribution of profits. It is decided to make an adjustment entry at the begining of the next year. Record the necessary journal entry.

Q.

Anubha and Kajal are partners of a firm sharing profits and losses in the ratio of 2 : 1. Their capital, were Rs 90, 000 and Rs 60, 000. The profit during the year were Rs 45, 000. According to partnership deed, both partners are allowed salary, Rs 700 per month to Anubha and Rs 500 per month to Kajal. Interest allowed on capital @ 5% pa. The drawings at the end of the period were Rs 8, 500 for Anubha and Rs 6, 500 for Kajal. Interest is to be charged @ 5% pa on drawings. Prepare partners capital accounts, assuming that the capital account are fluctuating.

Q.

A, B and C were partners. Their capital were Rs 30, 000, Rs 20, 000 and Rs 10, 000 respectively. According to the partnership deed, they were entitled to an interest on capital at 5%. p.a. In addition, B was also entitled to draw a salary of Rs 500 per month. C was entitled to a commission of 5% on the profit after charging the interest on capital but before charging the salary payable to B. The net profit for the year was Rs 30, 000 distributed in the ratio of their capitals without providing for any of the above adjustment. The profits were to be shared in the ratio of 2 : 2 : 1. Pass the required adjustment entry and show the working.

Q.

What is the full form of TRF in banking?

Q.

Illustrate how interest on drawings will be calculated under various situations.

Q. A and B are in partnership sharing profits and losses in the ratio of 3 : 2. They decided to admit C, their Manager, as a partner with effect from 1st April, 2017, giving him 1/4th share of profits.
C, while a Manager, was in receipt of a salary of ₹ 27, 000 p.a. and a commission of 10% of the net profits after charging such salary and commission.
In terms of the Partnership Deed, and excess amount, which C will be entitled to receive as a partner over the amount which would have been due to him if he continued to be the manager, would have to be personally borne by A out of his share of profit. Profit for the year ended 31st March, 2018 amounted to ₹ 2, 25, 000. You are required to show Profit and Loss Appropriation Account for the year ended 31at March, 2018.

Q. X and Y are partners in a firm. X is entitled to a salary of ₹ 10, 000 per month and commission of 10% of the net profit after partners salaries but before charging commission. Y is entitled to a salary of ₹ 25, 000 p.a. and commission of 10% of the net profit after chaging all commission and partners salaries. Net profit before providing for partners salaries and commission for the year ended 31st March, 2018 was ₹ 4, 20, 000, show distribution of profit.

Q. A, B, C, and D are partners in a firm sharing profits as 4 : 3 : 2 : 1 respectively. It earned a profit of ₹ 1, 80, 000 for the year ended 31st March, 2018. As per the Partnership Deed, they are to charge a commission @ 20% of the profit after charging such commission which they will share as 2 : 3 : 2 : 3. You are required to show appropriation of profits among the partners.

Q. X, Y and Z entered into partnership on 1st October, 2017 to share profits and losses in the ratio of 4 : 3 : 3. X, personally guaranteed that Z's share of profit after charging interest on capital @ 10% p.a. would not be less then ₹ 80, 000 in any year. The capital contributions were: X–₹ 3, 00, 000, Y–₹ 2, 00, 000 and Z–₹ 1, 50, 000.
The profit for the year ended 31st March, 2018 amounted to ₹ 1, 60, 000. Prepare Profit and Loss Appropriation Account.

Q.

What Is a Partnership Deed and Its Content?

Q.

A, B and C are partners in a firm. You are informed that:

(i) A draws Rs 2, 000 from the firm in the beginning of every month,

(ii) B draws Rs 2, 000 from the firm at the end of every month, and

(iii) C draws Rs 2, 000 from the firm in the middle of every month.

Interest on drawings is to be charged at 15% p.a. Calculate interest on partner's drawings.

Q. Anita and Ankita are partners sharing profits equally. Their capitals, maintained following Fluctuating Capital Accounts Method, as on 31st March, 2017 were ₹ 5, 00, 000 and ₹ 4, 00, 000 respectively. Partnership Deed provided to allow interest on capital @ 10% p.a. The firm earned net profit of ₹ 2, 00, 000 for the year ended 31st March, 2018.
Pass the journal entry for interest on capital.

Q. A, B and C are partners sharing profits in the ratio of 5 : 4 : 1. C is given a guarantee that his minimum share of profit in any given year would be at least ₹ 5, 000. Deficiency, if any, would be borne by A and B equally. The profit for the year 2017-18 amounted to ₹ 40, 000.
Pass necessary Journal entries in the books of the firm.

Q. Asgar, Chaman and Dholu are partners in a firm. Their Capital Accounts stood at ₹ 6, 00, 000; ₹ 5, 00, 000 and ₹ 4, 00, 000 respectively on 1st April, 2017. They shared Profits and Losses in the proportion of 4 : 2 : 3. Partners are entitled to interest on capital @ 8% per annum and salary to Chaman and Dholu @ ₹ 7, 000 per month and ₹ 10, 000 per quarter respectively as per the provision of the Partnership Deed. Sholus share of profit ( excluding interest on capital but including salary) is guaranteed at a minimum of ₹ 1, 10, 000 p.a. Any deficiency arising on that account shall be met by Asgar. The profit for the year ended 31st March, 2018 amounted to ₹ 4, 24, 000.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018.

Q.

P and Q were partners in a firm sharing profits in the ratio of 5:3. On 1-4-2014 they admitted R as a new partner for 1/8th share in the profits with a guaranteed profit of Rs 75, 000. The new profit sharing ratio between P and Q will remain the same but they agreed to bear any deficiency on account of guarantee to R in the ratio 3:2. The profit of the firm for the year ended 31-3-2015 was Rs 4, 00, 000.

Prepare Profit & Loss Appropriation A/c of P, Q and R for the year ended 31-3-2015.

Q. Ankur, Bhavns and Disha are partners in a firm. On 1st April, 2017, the balance in their Capital Accounts stood at ₹ 14, 00, 000, ₹ 6, 00, 000 and ₹ 4, 00, 000 respectively. They shared profits in the proportion of 7 : 3 : 2 respectively. Partners are entitled to interest on capital @ 6% per annum and salary to Bhavna @ ₹ 50, 000 p.a. and a commission of ₹ 3, 000 per month to Disha as per the provisions of the partnership Deed. Bhavnas share of profit (excluding interest on capital) is guaranteed at not less than ₹ 1, 70, 000 p.a. Dishas share of profit (including interest on capital but excluding commission) is guaranteed at not less than ₹ 1, 50, 000 p.a. Any deficiency arising on that account shall be met by Ankur. The profit of the firm for the year ended 31st March, 2018 amounted to ₹ 9, 50, 000.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018.

Q. On 1st April, 2018, an existing firm had assets of ₹ 75, 000 including cash of ₹ 5, 000. Its creditors amounted to ₹ 5, 000 on that date. The firm had a Reserve of ₹ 10, 000 while Partners Capital Accounts showed a balance of ₹ 60, 000. If Normal Rate of Return is 20% and goodwill of the firm is valued at ₹ 24, 000 at four years purchase of super profit, find average profit per year of the existing firm.