Appropriation of Profits

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. 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.

On March 31, 2017 after the close of accounts, the capitals of Mountain, Hill and Rock stood in the books of the firm at Rs 4, 00, 000, Rs 3, 00, 000 and Rs 2, 00, 000, respectively. Subsequently, it was discovered that the interest on capital @ 10% p.a. had been omitted. The profit for the year amounted to Rs 1, 50, 000 and the partner’s drawings had been Mountain: Rs 20, 000, Hill Rs 15, 000 and Rock Rs 10, 000. Calculate interest on capital.

Q.

What are 5 characteristics of a sole proprietorship?

Q. What is buy-back of shares?

Q.

Rakhi and Shikha are partners in a firm, with capitals of Rs 2, 00, 000 and Rs 3, 00, 000 respectively. The profit of the firm, for the year ended 2016-17 is Rs 23, 200. As per the Partnership agreement, they share the profit in their capital ratio, after allowing a salary of Rs 5, 000 per month to Shikha and interest on Partner’s capital at the rate of 10% p.a. During the year Rakhi withdrew Rs 7, 000 and Shikha Rs 10, 000 for their personal use. You are required to prepare Profit and Loss Appropriation Account and Partner’s Capital Accounts.

Q.

On March 31, 2017, after the close of books of accounts, the capital accounts of Ram, Shyam and Mohan showed balance of Rs 24, 000 Rs 18, 000 and Rs 12, 000, respectively. It was later discovered that interest on capital @ 5% had been omitted. The profit for the year ended March 31, 2017, amounted to Rs 36, 000 and the partner’s drawings had been Ram, Rs 3, 600; Shyam, Rs 4, 500 and Mohan, Rs 2, 700. The profit sharing ratio of Ram, Shyam and Mohan was 3:2:1. Calculate interest on capital.

Q.

Profit & loss appropriation account is ___ for transfer of profit to general reserve.

1. Credited

2. Debited

3. not entered

4. None of the above

Q. Anshul and Asha are partners sharing profits and losses in the ratio of 3 : 2. Anshul being a non-working partner contributed ₹ 8, 00, 000 as her capital. Asha being a working partner did not contribute capital. The partnership Deed provides for interest on capital @ 5% and salary to every working partner @ ₹2, 000 per month. Net profit before providing for interest on capital and partners salary for the year ended 31st March, 2018 was ₹ 32, 000.

Q.

A, B and C have capitals of Rs. 50, 000, Rs. 40, 000 and Rs. 30, 000 respectively who were carrying on a business in partnership. The firm reported profit for the year was Rs. 79, 200. Find out the share of each partner in the above amount after taking into account that no interest has been provided on advance given by A of Rs. 20, 000, in addition to his capital contribution.

1. Rs. 26, 400 to each partner

2. Rs. 33, 000 for A, Rs. 26, 400 for B and Rs. 19, 800 for C

3. Rs. 26, 000 for partner B & C and Rs. 27, 200 for A

4. None of these

Q.

On March 31, 2017 the balance in the capital accounts of Eluin, Monu and Ahmed, after making adjustments for profits, drawing, etc; were Rs 80, 000, Rs 60, 000 and Rs 40, 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 @ 5% p.a. The drawings during the year were Eluin Rs 20, 000; Monu, Rs 15, 000 and Ahmed, Rs 9, 000. Interest on drawings chargeable to partners were Eluin Rs 500, Monu Rs 360 and Ahmed Rs 200. The net profit during the year amounted to Rs 1, 20, 000. The profit sharing ratio was 3 : 2 : 1. Pass necessary adjustment entries.

Q.

Rahul, Rohit and Karan started partnership business on April 1, 2016 with capitals of Rs 20, 00, 000, Rs 18, 00, 000 and Rs 16, 00, 000, respectively. The profit for the year ended March 2017 amounted to Rs 1, 35, 000 and the partner’s drawings had been Rahul Rs 50, 000, Rohit Rs 50, 000 and Karan Rs 40, 000. The profits are distributed among partner’s in the ratio of 3:2:1. Calculate the interest on capital @ 5% p.a.

Q. Ratio of Current Assets (₹3, 00, 000) to Current Liabilities (₹2, 00, 000) is 1.5:1. The accountant of the firm is interested in maintaing a Current Ratio of 2:1 by paying off a part of the Current Liabilities. Compute amount of the Current Liabilities that should be paid so that the Current Ratio at the level of 2:1 may be maintained.

Q. From the following information, calculate Interest Coverage Ratio: Profit after Tax ₹1, 70, 000; Tax ₹30, 000; Interest on Long-term Funds ₹50, 000.

Q. Debt to Equity Ratio of a company is 0.5:1. Which of the following suggestions would increase, decrease or not change it:

(i) Issue of Equity Shares:	(ii) Cash received from debtors:
(iii) Redemption of debentures;	(iv) Purchased goods on Credit?

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% p.a. 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% p.a. on drawings. Prepare partners capital accounts, assuming that the capital account are fluctuating.

Q. On 1st April, 2013, Jay and Vijay entered into partnership for supplying laboratory equipments to government schools situated in remote and backward areas. They contributed capitals of ₹ 80, 000 and ₹ 50, 000 respectively and agreed to share the profits in the ratio of 3 : 2. The partnership Deed provided that interest on capital shall be allowed at 9% per annum. During the year the firm earned a profit of ₹ 7, 800. Showing your calculations cleary, prepare Profit and Loss Appropriation Account of Jay and Vijay for the year ended 31st March, 2014.

Q.

Ramesh and Suresh were partners in a firm sharing profits in the ratio of their capitals contributed on commencement of business which were Rs 80, 000 and Rs 60, 000 respectively. The firm started business on April 1, 2016. According to the partnership agreement, interest on capital and drawings are 12% and 10% p.a., respectively. Ramesh and Suresh are to get a monthly salary of Rs 2, 000 and Rs 3, 000, respectively.
The profits for year ended March 31, 2017 before making above appropriations was Rs 1, 00, 300. The drawings of Ramesh and Suresh were Rs 40, 000 and Rs 50, 000, respectively. Interest on drawings amounted to Rs 2, 000 for Ramesh and Rs 2, 500 for Suresh. Prepare Profit and Loss Appropriation Account and partners’ capital accounts, assuming that their capitals are fluctuating.

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 31st March 2018:

BALANCE SHEET as at 31st March, 2018
Liabilities		₹	Assets		₹
Mannu’s Capital	30, 000		Drawings:
Shristhi’s Capital	10, 000	40, 000	Mannu	4, 000
			Shristhi	2, 000	6, 000
			Other Assets		34, 000
		40, 000			40, 000

Profit for the year ended 31st March, 2018 was ₹ 5, 000 which was divided in the agreed ratio, but interest @ 5% p.a. on capital and @ 6% p.a. on drawings was inadvertently enquired. Adjust interest on drawings on an average basis for 6 months. Give the adjustment entry.

Q.

Triphati and Chauhan are partners in a firm sharing profits and losses in the ratio of 3:2. Their capitals were Rs 60, 000 and Rs 40, 000 as on January 01, 2015. During the year they earned a profit of Rs 30, 000. According to the partnership deed both the partners are entitled to Rs 1, 000 per month as Salary and 5% interest on their capital. They are also to be charged an interest of 5% on their drawings, irrespective of the period, which is Rs 12, 000 for Tripathi, Rs 8, 000 for Chauhan. Prepare Partner’s Accounts when, capitals are fixed.

Q.

The members of a Co-operative Society have

Q.

Following is the Financial Statement of Garima Ltd., prepare cash flow statement.

Particulars	Note No.	31st March 2017 (Rs)	31st March 2016 (Rs)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital	1	4, 40, 000	2, 80, 000
b) Reserve and surplus-Surplus	2	40, 000	28, 000
2. Current Liabilities
a) Trade payables		1, 56, 000	56, 000
c) Short-term provisions		12, 000	4, 000
(Provision for taxation)
Total		6, 48, 000	3, 68, 000
II) Assets
1. Non-current assets
a) Fixed assets
i) Tangible		3, 64, 000	2, 00, 000
2. Current assets
a) Inventories		1, 60, 000	60, 000
b) Trade receivables		80, 000	20, 000
c) Cash and cash equivalents		28, 000	80, 000
d) Other current assets		16, 000	8, 000
Total		6, 48, 000	3, 68, 000

Notes to Accounts

Particulars	31st March 2017 (Rs)	31st March 2016 (Rs)
1. Share capital
a) Equity share capital	3, 00, 000	2, 00, 000
b) Preference share capital	1, 40, 000	80, 000
	4, 40, 000	2, 80, 000
2. Reserve and surplus
Surplus in statement of profit and loss at the beginning of the year	28, 000
Add: Profit of the year	16, 000
Less: Dividend	4, 000
Profit at the end of the year	40, 000

Additional Information:

1. Interest paid on Debenture Rs 600
2. Dividend paid during the year Rs 4, 000
3. Depreciation charged during the year Rs 32, 000

Q. A and B are partners from 1st April, 2017, without a Partnership Deed and they introduced capitals of ₹ 35, 000 and ₹ 20, 000 respectively. On 1st October, 2017, A advances a loan of ₹ 8, 000 to the firm without any agreement as to interest. The profit and Loss Account for the year ended 31st March, 2018 shows a profit of ₹ 15, 000 but the partners cannot agree on payment of interest and on the basis of division of profits.
You are required to divide the profits between them giving reasons for your method.

Q.

Explain the conclusion of final accounts of partnership firm

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 been prepared it is discovered that interest at 5% p.a. 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 beginning of the next year. Record the necessary journal entry.

Q.

Is Mcdonald’s partnership business?

Q.

Q. Mita and Usha are partners in a firm sharing profits in the ratio of 2 : 3. Their Capital Accounts as on 1st April, 2015 showed balances of Rs. 1, 40, 000 and Rs. 1, 20, 000 respectively. The drawings of Mita and Usha during the year 2015-16 were Rs. 32, 000 and 24, 000 respectively. Both the amounts were withdrawn on 1st January 2016. It was subsequently found that the following items had been omitted while preparing the final accounts for the year ended 31st March, 2016:
(a) Interest on Capital @ 6% p.a.

Q. Following is the extract of the Balance Sheet of Neelkant and Mahadev as on 31st March, 2018.

BALANCE SHEET as at 31st March, 2018
Liabilities	₹	Assets***	₹***
Neelkant's Capital	10, 00, 000	Sundry Assets	30, 00, 000
Mahadev's Capital	10, 00, 000
Neelkant's Current A/c	1, 00, 000
Mahadev' Current A/c	1, 00, 000
profit and Loss Appropriation A/c (March 2018)	8, 00, 000
	30, 00, 000		30, 00, 000

During the year, Mahadev's drawings were ₹ 30, 000. Profits during the year ended 31st March, 2018 is ₹ 10, 00, 000. Calculate interest on capital @ 5% p.a. for the year ending 31st March, 2018.